In an optimal subsidy, marginal cost is shifted down so that it hits the point exactly parallel to where MC 1 = D (or the competitive quantity/price.) At this price, consumers have the same exact surplus as they did under competition (but tax payers have to pay the amount of the subsidy, ) and Producers get the competitive price + the amount of the price. (Tax money cancels out) and Social gain= the same as it did under competition.