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A scatter diagram, also known as a scatter plot, is an effective visual tool used to identify potential relationships between two quantitative variables. It displays individual data points on a two-dimensional graph, allowing viewers to see patterns or correlations that may exist. For instance, if the points form a clear upward trend, it suggests a positive correlation; if they form a downward trend, it indicates a negative correlation. This ability to visually assess relationships makes option C the best descriptor of a scatter diagram.

In contrast, plotting single variable trends typically involves line graphs or bar charts, which focus on one variable at a time, thus not capturing the relationship between two variables. Similarly, while a scatter diagram may display linear relationships, it does not exclusively represent linear data—a variety of patterns, including non-linear trends, can also be shown. Lastly, although scatter diagrams can be used in the context of regression analysis to explore data relationships before conducting further statistical testing, they are not directives for regression themselves. Instead, they serve as a preliminary tool. Therefore, the identification of potential relationships is the most fitting description of what a scatter diagram does.