Price determination is the process by which the price of a good or service is established in the market. It is influenced by the interaction of supply and demand. When the demand for a product, like smartphones, increases while the supply remains constant, prices tend to rise. Conversely, if there is an oversupply of smartphones and demand decreases, prices may fall. Market forces play a crucial role in price determination. Producers set prices based on production costs and desired profit margins, while consumers decide how much they are willing to pay. This ongoing interaction helps to balance the market, ensuring that resources are allocated efficiently.