KOSSA Academic and Employability Practice Test 2026 - Free KOSSA Practice Questions and Study Guide

The governing factor for market prices of goods is fundamentally rooted in the principles of supply and demand. This economic model expresses how the quantity of a good available (supply) and the desire for that good (demand) influence its price in the market.

When demand for a product increases while supply remains the same, prices typically rise, reflecting the higher willingness of consumers to pay. Conversely, when supply exceeds demand, prices are likely to fall as sellers compete to attract buyers. This dynamic is a crucial aspect of how markets function, as it ensures that resources are allocated efficiently.

Other laws and policies, such as fiscal and monetary policies, consumer protection laws, and market regulations, can influence market conditions and indirectly affect prices. However, the fundamental interaction between supply and demand remains the primary determinant of the market price for goods.