Gas prices monthly. We have seen that gas prices can f luctuate. But during some periods they have moved consistently.

Here are the data extracted for one week of each month from January 2002 to May 2007.

The bend in the plot and the increasing variation suggest a multiplicative model. Here is a multiplicative model with seasonal dummy variables for months.
Dependent variable is: Log price R squared = 92.0% R squared (adjusted) = 90.2%
s = 0.0377 with 66 - 13 = 53 degrees of freedom Variable Coeff SE(Coeff) t-ratio P-value Intercept 2.04566 0.0164 125 60.0001 Year since 2002 0.071754 0.0030 24.2 60.0001 Feb 0.002682 0.0210 0.128 0.8988 Mar 0.030088 0.0210 1.43 0.1574 Apr 0.053455 0.0210 2.55 0.0138 May 0.058316 0.0210 2.78 0.0075 Jun 0.044912 0.0221 2.03 0.0471 Jul 0.055008 0.0221 2.49 0.0159 Aug 0.061186 0.0221 2.77 0.0077 Sep 0.057329 0.0221 2.60 0.0122 Oct 0.039903 0.0221 1.81 0.0764 Nov 0.012609 0.0221 0.571 0.5704 Dec -0.085243 0.0221 -0.386 0.7011

a) Interpret the slope.

b) Interpret the intercept.

c) In what month of the year are gas prices highest?