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A subsidy is the opposite of a tax. It is money given by the government to producers. With a $4 subsidy, the supply curve shifts downwards by $4 at every point. This means it is cheaper for producers to make the item. The supply curve physically moves down, but technically it is an increase in supply. For example, a point at 100,10 now becomes 100,6 with the subsidy. This impacts the cost of producing the item.
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