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A subsidy is like the opposite of a tax, where the government gives money to those who make an item. 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 results in an increase in supply, with each point on the curve moving downward by $4. For example, a point at 100, 10 moves to 100, 6 with the subsidy.