When a Distribution Is Positively Skewed

question 33

Multiple Choice

When a distribution is positively skewed,

• A) standard deviation overestimates risk.
• B) standard deviation correctly estimates risk.
• C) standard deviation underestimates risk.
• D) the tails are fatter than in a normal distribution.

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Definitions:

Total Revenue

The total amount of money received by a firm from sales of its products or services before any expenses are subtracted.

Average Product

The output per unit of input, for example, the average quantity of product produced per worker or per machine.

Marginal Product

The additional output that results from using one more unit of a variable input, holding all other inputs constant.

Diminishing Returns

An economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot increase proportionally.