Which market structure is characterized by a small number of firms dominating the industry?

• A. Monopoly
• B. Oligopoly
• C. Perfect competition
• D. Monopolistic competition

Answer: (B)

The key idea is a market with only a few dominant firms that control most of the industry. When a small number of firms share the market, each one's decisions about price and output significantly affect the others, so they must consider rivals' likely reactions. High barriers to entry keep new players from easily joining, which helps these few firms maintain their influence. Products can be either similar or differentiated, but the defining feature is the concentration of market power among a small group.

This fits better than other structures: a monopoly has a single seller; perfect competition has many firms selling identical products with easy entry; monopolistic competition has many firms with differentiated products and easier entry.