How is the market price for a product determined?

Answer 1

Market price is determined by competition and self-interest. Self-interest by the shop owner will make him want to raise his prices in order to make more money for himself. The counterreaction to this is competition. When competition moves in the people will almost always choose the cheaper product, so in order to win the owners lower their prices and try to undersell the competition. Monopolies get rid of competition and therefore would only leave self-interest, and the owner would only raise the prices.