The graph below shows the market for wine in the ancient Roman province of Potium. Equilibrium is at E at the cross of demand (AB) and supply (GH). To win the gratitude of the mob governor Fidelius subsidises the sales of wine. As a result, the quantity produced and sold increases from Q_E to Q_S. Consumers pay the price P_C per unit while producers receive P_S per unit sold.

a.Identify the cost of the subsidy for the treasury.

b.By using the concepts of producer and consumer surplus examine whether the subsidy increases or decreases social welfare