Which description best captures a major characteristic of an oligopolistic market structure?

• A. Little or no nonprice competition between firms
• B. Production of a single product
• C. Significant barriers to entry
• D. Limited control by firms over product prices

Answer: (C)

Oligopoly is characterized by a small number of large firms that dominate the market and face high barriers to entry. Those barriers—such as huge start-up costs, control of essential resources, and economies of scale—keep new competitors from entering easily, preserving each firm's market power and the ability to influence prices and outputs. This makes significant barriers to entry the best description of a major characteristic. While firms in an oligopoly often use nonprice competition and products can be differentiated, the defining feature that shapes the structure is the difficulty for new firms to enter. The other options don’t fit as well because nonprice competition is common, products aren’t necessarily a single product, and firms in an oligopoly typically have substantial, not limited, influence over prices.