The shape of a learning curve graph is often referred to as a bell curve. It also can be thought of as a round hat with a brim. On the left-hand side of the bell will be the lowest scores on a test. There will be very few of these scores. Then, toward the middle will be the highest distribution of test scores. On the right-hand side, the bell curve will taper off similarly to that on the left, but instead of the lowest scores, the highest scores will be charted.
The learning curve is based on the psychological term "bell curve," a term which has become controversial because it implies that there will always be a similar distribution pattern of intelligence with very few scores at the top, many in the middle, and then very few at the lower-level scores. IQ tests also follow this bell-curve distribution model.
When teaching a course, an instructor will need to decide whether to grade on a curve based on actual exam performance. If the scores on an exam are not as high as the instructor had thought, then it might be apt for him to apply a grading curve. Perhaps some of the questions were more difficult than the instructor had thought. In order to apply a learning curve, an instructor can take the average score of the course and then plot those scores against an adjusted distribution model, thereby slightly raising all the students' scores. This does not mean that all of the students will receive passing grades, but that the curve will adjust for possible errors in exam questions.
It's not necessary to curve grades under certain circumstances due to ethical obligations that the instructor has to his students and to the institution of higher learning where he teaches. If an individual student complains about her grades and wants a higher score, a teacher is not obliged to give that student a higher grade. The same can be said for departments that may claim that an instructor must grade on a curve in order to pass a certain number of students per semester. Whether or not to grade on a curve should be a decision made by the individual instructor and shouldn't be influenced by outside factors.