What term describes the manner in which a price is determined by supply and demand?

The term "price mechanism" is the correct choice because it refers specifically to the process by which prices are determined in a market based on the interaction of supply and demand. In an economic context, the price mechanism explains how the equilibrium price of goods or services is established when the quantity supplied matches the quantity demanded.

When demand increases or supply decreases, for example, the price will typically rise. Conversely, if demand decreases or supply increases, prices tend to fall. This dynamic adjustment helps to allocate resources efficiently in the marketplace, reflecting consumers' preferences and producers' costs.

Understanding the price mechanism is crucial for real estate professionals as it provides insight into property values, market trends, and how external factors can impact pricing in the housing market or any sector reliant on supply and demand dynamics.