2. (40 points) Suppose that the domestic demand and supply for hats in a small open economy are given by: Q = 120 - P (demand) Q = -60 + 3P (supply)

Suppose that the country imposes a quota of 10 units. Find the new price after the quota is imposed. Compare the new price (with the quota) to the free trade price. By how much does the price rise after trade is restricted by the quota? What are the quantity supplied, quantity demanded and amount imported with the quota?