ESTUDYR
AGEC 105 EXAM #1 MOST TESTED QUESTIONS AND
ANSWERS GRADED A+ WITH RATIONALES
1. ___ percent of farmers produce about 80% of the agricultural output in the food & fiber
industry.
A. 10%
B. ✔ 20%
C. 40%
D. 60%
Rationale: A relatively small share (~20%) of farms generate the majority (~80%) of
production.
2. ___-farm income is important to agricultural producers today.
A. On-farm
B. Off-
C. Gross-
D. Net-
✔ B. Off-
Rationale: Off-farm income (income earned outside farming) is important for many farm
households.
3. The question type “What is” or “What would happen if” is best described as:
A. Normative
B. Descriptive
C. ✔ Positive
D. Prescriptive
Rationale: Positive questions ask what is or what would happen (fact/value-free).
4. The question type “What should be” is:
A. Positive
B. Factual
C. Predictive
D. ✔ Normative
Rationale: Normative questions involve value judgments about what ought to be.
5. Approximately how many farms are in the U.S.?
A. 500,000
B. 1 million
, ESTUDYR
C. ✔ 2 million
D. 5 million
Rationale: Roughly 2 million farms is the commonly cited order of magnitude.
6. A rational consumer maximizes his/her satisfaction or ___.
A. Revenue
B. Profit
C. Wealth
D. ✔ Utility
Rationale: Utility is the economic measure of satisfaction used in consumer theory.
7. A shift in the demand curve resulting from changes in income, population, tastes, or
prices of other goods is called:
A. Movement along demand
B. ✔ Change in demand
C. Change in quantity demanded
D. Law of demand
Rationale: A change in demand shifts the whole curve; price changes move along it.
8. Adam Smith is best known for:
A. The General Theory
B. The Communist Manifesto
C. ✔ The Wealth of Nations & the “invisible hand”
D. Theory of Relativity
Rationale: Smith’s Wealth of Nations and the invisible hand are foundational in
economics.
9. Agricultural economics is:
A. Pure mathematics applied to farms
B. Ecology of crops
C. ✔ An applied social science about allocation of scarce resources in food & fiber
production/consumption.
D. The study of animal breeding only
Rationale: Ag econ studies producers, consumers, markets, and resource allocation in
the food sector.
10. Capital in economics refers to:
A. Land resources
B. Money only
C. ✔ Manufactured resources used in production (tools, machinery, buildings).
AGEC 105 EXAM #1 MOST TESTED QUESTIONS AND
ANSWERS GRADED A+ WITH RATIONALES
1. ___ percent of farmers produce about 80% of the agricultural output in the food & fiber
industry.
A. 10%
B. ✔ 20%
C. 40%
D. 60%
Rationale: A relatively small share (~20%) of farms generate the majority (~80%) of
production.
2. ___-farm income is important to agricultural producers today.
A. On-farm
B. Off-
C. Gross-
D. Net-
✔ B. Off-
Rationale: Off-farm income (income earned outside farming) is important for many farm
households.
3. The question type “What is” or “What would happen if” is best described as:
A. Normative
B. Descriptive
C. ✔ Positive
D. Prescriptive
Rationale: Positive questions ask what is or what would happen (fact/value-free).
4. The question type “What should be” is:
A. Positive
B. Factual
C. Predictive
D. ✔ Normative
Rationale: Normative questions involve value judgments about what ought to be.
5. Approximately how many farms are in the U.S.?
A. 500,000
B. 1 million
, ESTUDYR
C. ✔ 2 million
D. 5 million
Rationale: Roughly 2 million farms is the commonly cited order of magnitude.
6. A rational consumer maximizes his/her satisfaction or ___.
A. Revenue
B. Profit
C. Wealth
D. ✔ Utility
Rationale: Utility is the economic measure of satisfaction used in consumer theory.
7. A shift in the demand curve resulting from changes in income, population, tastes, or
prices of other goods is called:
A. Movement along demand
B. ✔ Change in demand
C. Change in quantity demanded
D. Law of demand
Rationale: A change in demand shifts the whole curve; price changes move along it.
8. Adam Smith is best known for:
A. The General Theory
B. The Communist Manifesto
C. ✔ The Wealth of Nations & the “invisible hand”
D. Theory of Relativity
Rationale: Smith’s Wealth of Nations and the invisible hand are foundational in
economics.
9. Agricultural economics is:
A. Pure mathematics applied to farms
B. Ecology of crops
C. ✔ An applied social science about allocation of scarce resources in food & fiber
production/consumption.
D. The study of animal breeding only
Rationale: Ag econ studies producers, consumers, markets, and resource allocation in
the food sector.
10. Capital in economics refers to:
A. Land resources
B. Money only
C. ✔ Manufactured resources used in production (tools, machinery, buildings).
