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When a subsidy is implemented, the government provides money to producers to make an item. This decreases the cost of making the item, causing the supply curve to shift downward by the amount of the subsidy. This results in lower production costs for producers. The subsidy increases supply, causing the supply curve to shift to the right. To accurately measure this shift, each point on the curve is moved downward by the amount of the subsidy. For example, a point at 100, 10 would become 100, 6 after a $4 subsidy is implemented.
