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people, this is far simpler than you're making it. context and irony--age old comic tools--are the reasons this is funny. the hilarity and cringeworthiness of this clip is that the answer was given as part of a contest that she voluntarily entered, and that she knew would include a portion that required her to answer very easy questions. and she blew it gloriously! it was as if she had misspelled her name in a spelling bee.
but the deliciously ironic icing on the cake is, as another poster astutely noted, that her ridiculously inane answer to the question and subsequent high-showing in the pageant was perfect evidence of the real answer to the question - because ignorance and stupidity are not considered hurdles to social acceptance (and often even inspire reverence) in america, many americans are ignorant and stupid. like ms. upton, for example. delicious, delicious irony.