1. During the 1970's and 1980s there were many changes in the automobile industry which affected not only the major U.S. auto companies but also consumers. Japanese car companies such Toyota, Subaru and Honda started exporting car to the U.S. As a result new dealerships started popping up the across the U.S. selling these new automobiles. The popularity of Japanese cars surged when gas prices skyrocketed in the 1970s; Japanese car were significantly more fuel efficient than American cars. Furthermore, Japanese cars proved to be more reliable than their American counterparts. Japanese car companies were also much faster than America car companies in adopting efficiency enhancing production technology. In the early 1980s quotes were set for the importation of Japanese cars. American car companies argued that quotas were needed to give them a chance to catch up and become competitive with Japanese car companies. Sales for some American cars such as the Ford Pinto dropped: Ford had problems selling all of its inventory of Ford Pintos (it was not able to sell as many Pintos it hoped and expected to sell at the price it set). From these stylized facts use supply and demand analysis to answer the following questions. For each question use a graph to illustrate your answer. A) How did the increase of Japanese car dealerships across the U.S. affect price and quantity in the automobile market? B) As Americans became aware from consumer reports that Japanese cars were of much higher in quality and reliability than American cars, what do you think happened in the market for Japanese made cars? C) What happened to price and quantity in the market for Japanese cars as Japanese car companies implemented efficiency enhancing production technology? D). Given your answer to part C, what do you think happened in the market for U.S. made automobiles? E) Show the market for the Pinto when Ford had a problem selling as many Pintos as it expected and inventory accumulated