the equilibrium price clears the market it is the price at which
Market clearing A market-clearing price is the price of a good or service at which quantity supplied is equal to quantity demanded, also called the equilibrium price. The theory claims that markets tend to move toward this price. For a one-time sale of goods, supply is fixed, so the market-clearing price is simply the price at which all items can be sold, but no lower. (Demand can be adjusted by setting the price appropriately, perhaps through an auction mechanism.) In this case, the marketplace is literally cleared of all goods. For a market where goods are produced and sold on an ongoing basis, the theory predicts that the market will move toward a price where the quantity supplied in a broad time period will equal the quantity demanded. This might be measured over a period like a week, month or year, to smooth out irregularities caused by manufacturing in batches, and delivery schedules; sellers often have a buffer of inventory, so that products are always available for retail sale.