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A subsidy is the opposite of a tax, where the government pays you to make an item. In this market with a $4 subsidy, the supply curve shifts downward by the amount of the subsidy, indicating lower costs to make the item. The supply curve physically moves to the right, but is measured accurately by shifting downward. Each point on the curve is shifted down by $4, as shown with examples of 100,10 becoming 100,6 and 130,12 becoming.
