Which economic model describes a few firms dominating a market?

The correct choice is C, as an oligopoly is characterized by a market structure in which a small number of firms hold a significant market share. This concentration of market power means that the actions of one firm can directly influence the decisions and performance of others within the industry. Oligopolies often engage in strategic behavior, such as price setting or collusion, to maximize their profits, which can lead to less competition and potentially higher prices for consumers compared to more competitive market structures.

Monopoly describes a situation where a single firm dominates the entire market, eliminating competition altogether. Perfect competition involves a large number of firms, each of which is too small to influence market prices significantly, leading to price uniformity and consumer welfare. Monopsony refers to a market situation where there is only one buyer for many sellers, which is distinct from the context of a few firms as sellers. Understanding these distinctions helps clarify why oligopoly is the appropriate choice when discussing a market dominated by a few firms.