A group of teens in your town meet and agree to charge a flat fee of five dollars per hour for babysitting. They charge the same rate no matter how many children there are, or when the service is needed.

A group of teens in your town meet and agree to charge a flat fee of five dollars per hour for babysitting. They charge the same rate no matter how many children there are, or when the service is needed. Then they divide areas of town on a map between them, agreeing to only serve customers within their respective areas. Within weeks they have gained most of the business in town, driving out other teens that cannot lower their rates. The babysitting market in your town has become

a monopoly

an oligopoly

purely competitive

monopolistically competitive

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