What describes a market situation where control over supply is held by a small number of producers?

The correct answer is indeed the situation described by the term "oligopoly." In an oligopoly, a small number of producers control a significant portion of the market supply. This can result in interdependent decision-making, where the actions of one producer can directly impact the others. This market structure is characterized by a limited number of firms, which can lead to higher prices for consumers and potentially less competition than in more fragmented markets.

In contrast, perfect competition features many producers with no single firm controlling supply, allowing for maximum competition and consumer choice. Monopoly describes a market where a single producer controls the entire supply, leading to a lack of competition. Monopolistic competition involves many producers, but unlike perfect competition, each offers differentiated products, allowing some level of market power. Thus, oligopoly is distinct due to the concentration of market control among a few firms.