Prices of crude oil have been steadily rising over the last two years (The Wall

Question

Prices of crude oil have been steadily rising over the last two years (The Wall Street Journal, December 14, 2010). The monthly data on price per gallon of unleaded regular gasoline in the United States from January 2009 to December 2010 were available. Three trend models were created, and the following relevant information became available. Based on adjusted R^2, which of the following models is the most appropriate for making a forecast for the price of regular unleaded gasoline? Cubic Quadratic Linear Cannot be estimated

Explanation / Answer

The value of adjusted R2 is highest in cubic model. Hence,

Option A is the correct choice.

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