(a)The State of Georgia has decided to substantially increase state's subsidies to public colleges. With the theory of demand and supply, graphically illustrate and carefully explain how a huge increase in Georgia State's subsidies to public colleges might affect tuition and enrollment in both public and private colleges in Georgia, other things equal. Hint: Use two market diagrams for your analysis - one for public and one for private college.

(b)Assume that the supply function of product X is: Q_s = 115 + 4P_x - 5P_y + 3P_z, where Q_s is quantity of product X supplied, P_x is unit price of product X, P_y is unit price of product Y, and P_z is unit price of an input.

i.If P_y = $37 and P_z = 15, estimate the producer's surplus when quantity supplied of X is 10 units. Clearly show your steps and calculations. You may use a diagram to aid your calculations.

ii.Carefully interpret your estimated producer's surplus.