Off-road motorcycles (often called "dirt bikes") are a segment (about 18%) of the growing motorcycle market. Because dirt bikes offer great variation in features, they are a good market segment to study to learn about which features account for the cost (manufacturer’s suggested retail price, MSRP) of a bike. Researchers collected data on 2005-model dirt bikes (lib .stat. cmu. edu/datasets/dirtbike_aug. csv). Their original goal was to study market differentiation among brands. (The Dirt on Bikes: An Illustration of CART Models for Brand Differentiation, Jiang Lu, Joseph B. Kadane, and Peter Boatwright). In Chapter 17, Exercises 41, 42, and 43 dealt with these data, but several bikes were removed from those data to simplify the analysis. Now we’ll take on the full set. Here’s a regression model and some associated graphs. Well, in honesty, we’ve removed one luxury handmade bike whose MSRP was $19,500 as a clearly identified outlier.
a) List aspects of this regression model that lead to the conclusion that it is likely to be a useful model.
b) What aspects of the displays indicate that the model is a good one?