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A subsidy is opposite to a tax, where the government gives money to producers. With a $4 subsidy, the cost of production decreases. The supply curve shifts down by the subsidy amount, increasing supply lower production costs. This results in a downward movement along the curve, but technically increases supply. Every point on the curve shifts downward by $4. For example, a point at 100,10 becomes 100,6 with a subsidy.
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