If cost data have a long tail of very high costs, the distribution is described as being skewed in which direction?

• A. Left-skewed
• B. Normal distribution
• C. Uniform distribution
• D. Right-skewed cost data

Answer: (D)

When a distribution has a long tail of very high costs, the tail extends to the right, pulling the bulk of the data toward the lower end. This is called right-skewed (positive skew) data. In a right-skewed cost distribution, many observations cluster at lower costs while a few extremely high costs stretch the tail to the high end, often making the mean larger than the median. The other shapes don’t fit: a left-skewed distribution would have the tail on the low-cost side; a normal distribution is symmetric; a uniform distribution would have no leaning tail and would be flat. Therefore, the data are right-skewed.