1. a. President Bush commissioned a study whose objective was to determine what the maximum tax rate on individuals and corporations should be. To what branch of economics does this study correspond?

b. What branch of economics is concerned with the effects of food safety (e.g., E.coli ) on consumer demand for beef? (i.e., what-if types of questions)

c. What branch of economics is concerned with the rate of inflation and the un employment rate?

d. What branch of economics deals with the consumption expenditures of AGEC 105 students at Texas A&M University?

2. Circle the correct answer. Economy reasoning that is true for one individual but not for society       as a whole is referred to as _________?

a. specialization b. fallacy of composition . c. opportunity cost        d. normative economics

3. The Stinson family owns a farm in Amarillo, Texas. Three alternatives for how to use the farm:

Growth wheat. Wheat yield would be 70 bushels per acre. The price of wheat is $ 3.50 /bu and production expenses are $ 140 /ac.

Growth barley. Barely yield would be 50 bushels per acre. The price of barely is $ 2.50 /bu and production expenses are $ 150 / ac.

Lease out the acres. The Stinson’s would still have expenses of $ 35/ac.