Subsidies

A subsidy is giving financial support to domestic producers to give them a competitive advantage over foreign producers, this can be in the form of grants or tax breaks. It will generally lowers prices for consumers.

The effect of a subsidy  as in shown in the above graph, is to lower supply costs, this will lead producers to increase supply. This is shown in the shift between S pre subsidy and S post subsidy (S-S1).
This increase of supply will decrease the price of the product to market (P1-P2) and thus increase quantity demanded by the market (Q1-Q2).