Which of the following best describes an oligopoly?

• A. A market structure dominated by a few large firms, each of which has some control over market price.
• B. A market structure where firms have no influence over price and must accept the market price.
• C. A market structure with many sellers offering identical products.
• D. A market structure with a single seller and many buyers.

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the definition of different market structures in microeconomics, focusing on the number of firms and their influence over price.
2. Step 2: Recall that an oligopoly is characterized by a few large firms dominating the market, each having some control over the market price due to limited competition.
3. Step 3: Compare this with perfect competition, where many sellers offer identical products and firms are price takers with no control over price.
4. Step 4: Contrast with monopoly, where there is a single seller with significant control over price and market supply.
5. Step 5: Identify that the correct description of an oligopoly is a market structure dominated by a few large firms, each of which has some control over market price.