In economics, which of the following describes the basic market structure characteristic of an oligopoly?

Introduction / Context:
This question checks your understanding of the oligopoly market structure in microeconomics. Knowing how many buyers and sellers typically operate in different market forms is essential for exams on Indian economy, general studies, and competitive examinations. Oligopoly is one of the four classic market structures alongside perfect competition, monopoly, and monopolistic competition, and it has its own distinctive features regarding the number of firms, interdependence, and pricing power.

Given Data / Assumptions:

• The question is about the basic characteristic of an oligopoly market.
• The focus is on the typical number of sellers and buyers.
• Standard textbook definitions of market structures are assumed.

Concept / Approach:
An oligopoly is defined as a market structure with a small number of relatively large firms dominating the market. Each firm has significant market share and is interdependent with the others, meaning that one firm's decision on price or output affects the others. On the buyer side, in most oligopolistic markets, there are many buyers. The core feature we need is therefore "few sellers" with a usually large buyer base, not the other way around.

Step-by-Step Solution:
Step 1: Recall that perfect competition has many sellers and many buyers with no individual market power.Step 2: Recall that monopoly has one seller and many buyers, so it cannot be oligopoly.Step 3: In an oligopoly, a small group of firms controls most of the market supply.Step 4: Buyers are normally numerous and do not have much individual bargaining power.Step 5: Therefore, the suitable phrase is "a few sellers, many buyers".

Verification / Alternative Check:
To verify, think of real world examples such as the telecom industry in many countries, the soft drink market, or the passenger airline industry on certain routes. In such cases, a few big firms dominate supply, but the number of consumers is very large. This validates that the defining characteristic of oligopoly is a limited number of sellers facing a large number of buyers.

Why Other Options Are Wrong:
Many sellers, a few buyers describes oligopsony, where buying power is concentrated in a few hands. A few sellers, a few buyers describes bilateral oligopoly, which is a more specialised case. A few sellers, one buyer describes a situation close to a monopsony on the demand side. Many sellers, many buyers is more like perfect competition, not oligopoly.

Common Pitfalls:
A common mistake is to focus only on the word oligopoly and confuse it with oligopsony because both involve the idea of "few". Another pitfall is assuming that any market with a limited number of buyers or sellers is automatically an oligopoly, without checking which side of the market has the concentration. Remember that in exam oriented definitions, oligopoly always emphasises a few dominant sellers facing many buyers.

Final Answer:
The correct basic characteristic of an oligopoly is a few sellers, many buyers, which captures the idea of seller concentration with a large, dispersed group of consumers.