A government pays firms directly to encourage them to carry out certain actions, effectively lowering their cost of production. What kind of policy is this, and what does it do to the supply curve?

1. A subsidy is a direct payment or tax reduction the government gives a firm, the opposite of a tax. 2. By reducing the firm's cost of production, a subsidy raises profit at every price. 3. Higher profit at every price makes firms willing to supply more at every price. 4. A curve showing a higher quantity supplied at every price has shifted to the right, so options B, C, and D all get either the policy or the direction wrong. _Source: OpenStax Principles of Macroeconomics for AP Courses (CC BY 4.0), Ch 3 "Demand and Supply", section 3.2 | Shifts in Demand and Supply for Goods and Services_