Suppose that the domestic demand and supply for milk in a small open economy are given by QD = 80 – P,  QS = 40 + 2P, where P denotes price and Q denotes quantity. If the world price is $10, what is the free trade level of imports?  The country imposes a quota of 4 units. Calculate and graph the following effects of an import quota: the     increase in the domestic price; the quota rents; DWL. Graph

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