What does a subsidy generally do to supply in a market?

A subsidy is a financial assistance given by the government to producers with the intention of encouraging production or reducing the cost of goods and services. When a subsidy is provided, it typically lowers the producers' overall costs. As a result, producers are often able to supply more of a good or service at each price level since their profit margins increase.

By making it more financially viable for firms to produce, a subsidy can incentivize existing firms to increase their output or attract new firms into the market. This leads to an overall increase in supply, which is reflected in a rightward shift of the supply curve.

Additionally, the other options do not accurately reflect the effect of a subsidy. For example, an increase in the cost of production would be a consequence of higher expenses, while decreasing the number of firms contradicts the typical impact of subsidies, which usually encourages more market participation. That is why the correct answer indicates that a subsidy generally increases supply in a market.