The Correct Answer and Explanation is:
The correct answer is utility.
In the field of economics, utility is the core concept used to describe the satisfaction, happiness, or benefit that a consumer derives from consuming a good or service. The phrase “want-satisfying power” is a classic textbook definition of utility. It represents the capacity of a product or service to fulfill a consumer’s desires or wants.
The scenario provided, featuring Michael’s desire for a Mercedes he cannot afford, perfectly illustrates this principle. The Mercedes possesses high utility for Michael because he believes owning it would bring him significant pleasure and satisfaction. This desire exists independently of the car’s price or his financial capacity. Utility is subjective; the amount of satisfaction Michael expects from the car is unique to him and might differ greatly from another person’s valuation. This subjective satisfaction is what drives consumer demand.
Let’s examine why the other options are incorrect. Exchange is the process of trading one thing for another, which is facilitated by a good’s utility but is not the power itself. Value is a related but distinct concept, often referring to a good’s monetary worth or importance (exchange value), which is determined by market forces like supply and demand. While utility influences value, it is the underlying satisfaction. A necessity is a good required for survival, like food or water. The Mercedes is a luxury item, highlighting that utility applies to wants, not just needs. Finally, strategy is a plan of action and is irrelevant to the inherent properties of a good. Therefore, utility is the precise economic term for the want-satisfying power of a good.
