In economics, supply and demand is the relationship between how much of a good or service that producers wish to sell, and how much consumers wish to purchase. As such the price of a good or service is determined by the interaction of supply and demand in the market. The price of a good or service is based on the price where demand = supply.
To help with visualizing this, we've got a supply and demand curve below. As you can see, the price is determined by the point at which supply = demand. i.e price is set by how much people want something, and how much of that thing is available.
This point is called the equilibrium.
Generally speaking, the more of a good there is, the less it is worth, meaning its price is lower. For example, commodities like gold and diamonds are more expensive than commodities like coal as there is less of gold and diamonds and more of coal. Scarcity → drives prices up. This is also why we can't simply print more money, as this would increase the amount of bills in circulation and give them less value.