Final answer:
To calculate the 3-month Weighted Moving Average (WMA) forecast for the average gas prices, multiply each average gas price by its respective weight (0.6, 0.3, and 0.1), add the results, and divide by the sum of the weights. Repeat this process for the average gas prices from the last three months to predict the average retail gasoline price for August 2008.
Step-by-step explanation:
To calculate the 3-month Weighted Moving Average (WMA) forecast for the average gas prices, we will use the given weights of 0.6, 0.3, and 0.1. The first weight of 0.6 is assigned to the most recent month, the second weight of 0.3 is assigned to the second most recent month, and the third weight of 0.1 is assigned to the least recent month.
1. Multiply the average gas price from the most recent month by the first weight of 0.6.
2. Multiply the average gas price from the second most recent month by the second weight of 0.3.
3. Multiply the average gas price from the least recent month by the third weight of 0.1.
4. Add the results of step 1, 2, and 3.
5. Divide the sum from step 4 by the sum of the weights (0.6 + 0.3 + 0.1 = 1).
6. Round the result to two decimal places to obtain the 3-month WMA forecast for the average gas prices.
To predict the average retail gasoline price for August 2008, repeat the above steps using the average gas prices from May, June, and July 2008 as inputs.