What defines an oligopoly in a market structure?

An oligopoly is defined by a market structure in which a small number of businesses dominate the supply of a particular product or service. This concentration of market power allows the firms to influence prices and output levels, as each firm's decisions can significantly impact the others.

In an oligopoly, the businesses are interdependent, meaning that the actions of one firm, such as changing prices or increasing production, will likely provoke a reaction from the other firms within the market. This interaction often leads to strategic behavior and can result in various forms of competition, including price wars or collusion, where firms may work together to set prices.

The other options describe different market structures. A large number of businesses supplying diverse products typically characterizes monopolistic competition, while a single company dominating the market reflects a monopoly. An equal number of suppliers and consumers does not pertain to any specific market structure and does not accurately capture the dynamics at play in an oligopoly.