How do bitcoin exchanges set prices? What do exchanges base their Bitcoin and alt currency prices on? What makes them say that they will sell bitcoins for certain amount? Do they increase and decrease their price based on what other exchanges are selling for?
An exchange doesn't set a price at all. It provides a framework for customers to buy and sell coins to each other, at whatever prices the buyers and sellers find mutually agreeable. The exchange itself does not buy or sell, and the prices it quotes are just a report of what its customers are doing  right now.