It was believed that the probability of a small business that declared bankruptcy per month was the same in any month. Also the number of small businesses that declared bankruptcy was the same every month. Which of the following distributions would you use to figure out the probability that more than 3 bankruptcies will occur next month?
A) exponential distribution
B) hypergeometric distribution
C) Poisson distribution
D) uniform distribution

Question

Quizplus · Accepted Answer

The situation described is a classic example of the Poisson distribution, which models the probability of a certain number of events occurring within a fixed time interval or in a certain area, given the average rate of occurrence. The Poisson distribution is commonly used to model the number of rare events, such as the bankruptcy of small businesses, over time. Therefore, the Poisson distribution would be the best choice to figure out the probability that more than 3 bankruptcies will occur next month.

It Was Believed That the Probability of a Small Business