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A subsidy is money from the state to keep prices low in certain industries. For example, if it costs Bill $10 to make a hat but someone in China can do it for $5, a $6 subsidy from the US makes Bill competitive. Subsidies can benefit society by encouraging new technologies or exploration, but sometimes harm by favoring certain industries over others. For instance, the US heavily subsidizes production, hurting poorer parts of the world like Brazil who can't compete.