Market Clearing

Market clearing is the process where the quantity of goods or services that sellers want to sell matches exactly with what buyers want to buy at a given price. At this point, the market reaches equilibrium, meaning there are no shortages or surpluses. If prices are too high, suppliers may produce more than consumers want, leading to surplus. If prices are too low, demand exceeds supply, causing shortages. Market clearing ensures resources are efficiently allocated, and transactions occur smoothly, balancing supply and demand naturally through price adjustments.