Oligopolies are considered to be:

• A. markets dominated by a few large firms, each with significant market power
• B. industries where firms have no influence over price
• C. markets with many small firms and perfect competition
• D. markets characterized by a single seller

Answer: (A)

Verified step by step guidance

1. Understand the definition of an oligopoly: it is a market structure characterized by a small number of large firms that dominate the market.
2. Recall that in an oligopoly, each firm has significant market power, meaning they can influence the price of the product rather than being price takers.
3. Contrast this with perfect competition, where many small firms exist and no single firm can influence the market price.
4. Also distinguish oligopoly from monopoly, where there is only one seller, and from perfectly competitive markets where firms have no influence over price.
5. Conclude that the correct description of an oligopoly is a market dominated by a few large firms, each with significant market power.