What is price mechanism?

It s mechanism in which prices guide the flow of factors which bring the market to an equilibrium. Suppose, there is excess supply in the market. However, the participating buyers and sellers do not necessarily know that. The price starts falling in response to excessive supply. This signals the market participants that there is too much supply so that they adjust their behavior and the market reaches a equilibrium with lower price and higher quantity. This is the price mechanism. This is in contrast to the planning mechanism where the central planner decides how much to produce rather than using price adjustment to guide the market.

Price is generally determined by the market forces, i.e. demand and supply.
If the supply of goods increases as compared with demand of goods then price of that product tend to fall by market forces because the request does not meet with the supply of goods, so there is a glut in the market.
On the other hand, if demand is more than the supply of product then its price increase.
The most famous example in these days. Now in Navratris prices of potatoes and fruit increases because of a sudden rise in its demand and the same thing happen with dates in Roza during Ramzan(fast).

The way in which Price is determined through  market interaction between two conflicting agents sellers and buyers, until willingness to receive of sellers and willingness to pay of buyers finally matched is called price mechanism. It is the main instrument used in market system to value a good or service- neither overestimated nor underestimated. But the problem arises when government comes to intervene. 

In economics, a price mechanism is the manner in which the profits of goods or services affect the supply and demand of goods and services, principally by the price elasticity of demand. A price mechanism affects both buyers and sellers who negotiate prices.

The way in which Price is determined through  market interaction between two conflicting agents sellers and buyers, until willingness to receive of sellers and willingness to pay of buyers finally matched is called price mechanism. It is the main instrument used in market system to value a good or service- neither overestimated nor underestimated. But the problem arises when government comes to intervene.