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

(A) Describe the relationship between number of tourists and spending.

Looking at the scatterplot, we see strong evidence for a linear relationship between number of tourists and total spending. The relationship appears to be positive.

(B) What are the explanatory and response variables?

Our response variable is the spending (in millions of dollars), and our explanatory variable is the number of tourists (in thousands).

(C) Why might we want to fit a regression line to these data?

We may want to explain observed amounts of spending as a function of number of tourists in a year. We may also want to try and extrapolate beyond historical numbers of tourists if we are planning a large event (for example, hosting the olympics).

(D) 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.

Linearity: Yes, the scatter plot shows a pretty strong linear relationship.

Residuals: The residuals are somewhat normal.

Variability: There is some slight shift in variability.

Independence: Yes, a year over year comparison