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In the tutorial, the concept of subsidies is explained as being the opposite of taxes, where the government provides money to producers to incentivize production. With a $4 subsidy in the market, the supply curve shifts downward by the amount of the subsidy, making it cheaper to produce the item. This downward shift in the curve represents an increase in supply, moving to the right but technically measured by shifting downward. Each point on the supply curve is adjusted by the $4 subsidy amount. For instance, a point at 100, 10 would shift to 100, 6, and a point at 130, 12 would also adjust accordingly downwards.