Exercise 7.23

Tourism spending. The Association of Turkish Travel Agencies reports the number of foreign tourists visiting Turkey and tourist spending by year. Three plots are provided: scatter-plot showing the relationship between these two variables along with the least squares fit, residuals plot, and histogram of residuals.

  1. Describe the relationship between number of tourists and spending.

    -There appears to be a very strong, positive, linear relationship between the number of tourists and spending.

  2. What are the explanatory and response variables?

    -Explanatory: Number of Tourists (in thousands)

    -Response: Spending (in millions of USD)

  3. Why might we want to fit a regression line to these data?

    -To predict revenue from tourist spending or when examining returns on tourism advertising.

  4. Do the data meet the conditions required for fitting a least squares line? In addition to the scatterplot, use the residual plot and histogram to answer this question.

    -Overall: No, the data appear to follow a non-linear pattern and there may be an underlying relationship due to the data being collected over time.

    -Linearity: No, Purely from examining the scatter plot the relationship appears to be linear but based on the residual plot there appears to be a non-linear relationship.

    -Nearly Normal Residuals: Yes, The residuals appear to be nearly normal.

    -Constant Variability: No, the variability appears to increase with the number of tourist.

    -Independent Observations: No, the data was collected sequentially.