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When there is a $4 subsidy in a market, the supply curve shifts downward by the amount of the subsidy. This means it now costs less to make the item because the government is contributing. Each point on the curve is moved down by $4, showing an increase in supply as costs decrease. For example, a point at 100,10 now becomes 100,6 after the subsidy. The subsidy affects the supply curve by lowering costs and increasing production.
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