Help Center

Home

Financial Terms and Glossary

Market clearing

Market Clearing

Market clearing refers to the condition in which supply equals demand in a market, meaning all goods or securities offered for sale are purchased at the equilibrium price.In a market-clearing situation, there are no surpluses or shortages, and the price adjusts to ensure that the quantity supplied matches the quantity demanded. In financial markets, market-clearing prices ensure that buyers and sellers transact efficiently.

Example

In the housing market, the market-clearing price is the price at which the number of homes available for sale equals the number of buyers willing to purchase homes.

Key points

• The condition where supply equals demand, and all goods or securities offered for sale are bought.

• The market-clearing price is the equilibrium price at which no surpluses or shortages exist.

• Ensures efficient transactions in financial markets.

Quick Answers to Curious Questions

It refers to a situation where the quantity supplied equals the quantity demanded at the equilibrium price, resulting in no surpluses or shortages.

The market-clearing price is determined by the interaction of supply and demand, adjusting to ensure all goods or securities are sold.

It ensures efficient transactions, with no excess supply or unmet demand, allowing buyers and sellers to transact smoothly.

scroll top