The Correct Answer and Explanation is:
The correct answer is utility.
In the field of economics, utility is the central concept that describes the satisfaction, pleasure, or fulfillment a consumer gains from consuming a good or service. It is the measure of a product’s capacity to satisfy a consumer’s wants or needs. This concept is foundational to the theory of consumer choice, as it explains why individuals prefer one good over another. When people make decisions about what to buy, they are implicitly, if not explicitly, attempting to maximize the total utility they can achieve within the limits of their budget.
The question asks to identify the term for the “want-satisfying power of a good,” which is the precise definition of utility. The introductory sentence about Michael provides a clear example. Michael’s desire for the Mercedes, even though he knows he cannot afford it, demonstrates the high utility he associates with the car. For him, the Mercedes represents more than just transportation; it likely offers a sense of prestige, luxury, comfort, and enjoyment. This anticipated satisfaction is the utility of the car. His strong want for the vehicle, independent of its practical necessity or financial feasibility, is driven by the high level of utility he expects to derive from owning it.
The other options are incorrect. Exchange is the process of trading goods or services. Value is a broader concept that is often a consequence of utility, typically measured in monetary terms. A necessity is something essential for survival, which a luxury car is not. Strategy refers to a plan of action and is unrelated to the inherent properties of a good. Thus, utility is the specific economic term for the power of a good to satisfy a want.
