I am now doing Hartshorne Problem 1.2.6.
Hartshorne 1.2.6: Let $Y$ be a projective variety with homogeneous coordinate ring $S(Y)$, show that $\dim S(Y) = \dim Y + 1$. [Hint: Let $\varphi_i : U_i \to \Bbb{A}^n$ be the homeomorphism of (2.2), let $Y_i$ be the affine variety $\varphi(Y \cap U_i)$ be its affine coordinate ring. Show that $A(Y_i)$ can be identified with the subring of elements of degree $0$ of the localized ring $S(Y)_{x_i}$. Then show that $S(Y)_{x_i} \cong A(Y_i)[x_i,x_i^{-1}]$.
Now I have done most of the exercise but have several questions related to it:
The notation $S(Y)_{x_i}$ means localization at the multiplicative set $\{1,x_i,x_i^2,\ldots\}$ yes? It does not mean localization at the prime ideal $ (x_i)$ right? I don't think the two coincide.
Assuming I understand the notation right, I am confused how we can just do $S(Y)_{x_i}$ without some extra assumptions. In particular it could be that $x_i$ is zero in $S(Y)$, i.e. $x_i \in I(Y)$ then we are in trouble because the localization is the zero ring. Should there be an extra assumption here?
Also how can I say that $S(Y)_{x_i} \cong A(Y_i)[x_i,x_i^{-1}]$? I know how to prove this if $S(Y)$ is a $\Bbb{Z}$ - graded ring but now it is just a $\Bbb{N}$ - graded ring.