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A subsidy is a sum of money given by the state to lower product prices. For example, if it costs Bill $10 to produce a hat, but only $5 in China, a $6 subsidy from the government can help Bill produce hats cheaper. Subsidies can benefit society by promoting new technologies like solar energy, but can also harm by making unprofitable industries competitive at the expense of others. For instance, the US heavily subsidizes cotton production, disadvantaging poorer countries like Brazil.
