Technically, both are correct—though some people might take issue with exhibit in that context. According to Grammarist, an exhibit is “a public showing of an object … or a small collection of objects,” while an exhibition is “a public showing of a large selection of such items, unified by theme.” In other words, an exhibition is made up of exhibits, and a small exhibition is really just an exhibit.
But small leaves a lot up to interpretation; it’s not like once you hit 25 items, your exhibit is large enough to be considered an exhibition. The Oxford English Dictionary offers an alternate distinction involving provenance rather than size: An exhibit is a “collection of articles sent by any one person, firm, country, etc. to an ‘exhibition.’” It also validates Grammarist’s definition of exhibit as any single object in an exhibition.
Since at least the late 19th century, however, North American English speakers have been using exhibit as a direct synonym for exhibition. The trend became so common that in 1993, the OED finally updated its entry for exhibit to include exhibition as another definition. So the two terms can be used interchangeably, regardless of the scale of the installation in question. British English speakers typically prefer exhibition, whereas many North American English speakers still opt for exhibit. (But if you’re talking about one item on display, the word you want is exhibit.)
You could argue that this is a classic case of a term’s being misused so widely and for so long that it eventually gets accepted as correct. That’s just how language evolves; some words have even become their own opposites.
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