The distribution of profits of a company follows:
Options
AJ-shaped frequency curve
BU-shaped frequency curve
CBell-shaped frequency curve
DAny of these
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Statistical Description of DataMTP Dec 22 - Series IQuestion 2744 of 295
All Questions Correct Answer
✅ Option c — Bell-shaped frequency curve
All Options:
- AJ-shaped frequency curve
- BU-shaped frequency curve
- CBell-shaped frequency curve
- DAny of these
Detailed Solution & Explanation
In corporate economics, if we study the profits of a large number of companies within an industry or economy:
- Most companies will earn a moderate, average level of profit, clustering around a central mean.
- A small number of highly successful companies will earn extremely high profits, forming a tapering tail on the right.
- A small number of struggling companies will earn extremely low profits or experience losses, forming a tapering tail on the left.
Graphically, when the number of companies (frequency) is plotted against their profit levels, the resulting curve starts low, rises to a single peak in the center, and tapers off at both extremes. This is characteristic of a **Bell-shaped frequency curve**.
- A **U-shaped curve** would imply that most companies make either huge profits or huge losses, with very few in the middle, which is economically incorrect.
- A **J-shaped curve** would mean profits continuously increase without bound, which is also unrealistic.
Hence, **Option C** is the correct answer.
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