Which market structure is characterized by a few suppliers offering similar products and controlling supply and price?

The correct answer is based on the defining characteristics of an oligopoly. In this market structure, only a small number of firms dominate the market, and they offer similar or differentiated products. This limited number of suppliers leads to a scenario where each firm has significant control over the market's overall supply and pricing strategies.

Because the suppliers are few, they often become interdependent, meaning the decisions made by one firm can heavily influence the others. For instance, if one firm raises its prices, the others might follow suit, knowing that their products are similar, which can lead to higher overall prices in the market. This interdependence often results in strategic behavior, such as collusion or price wars, as firms seek to maintain their market share while trying to maximize their profits.

This contrasts with other market structures: a monopoly is characterized by a single supplier dominating the market, perfect competition features many suppliers offering identical products leading to no control over prices, and monopolistic competition involves many suppliers offering differentiated products with some control over pricing but not to the degree found in an oligopoly. Understanding these distinctions is key to recognizing how different market structures function and influence economic behavior.