What is market clearing?
It's the process by which the supply of something that's traded is equated to the demand, so that there's no leftover supply or demand. A market-clearing price is one that causes quantities supplied and demanded to be equal.
Where have you heard about market clearing?
It's a key concept in modern economics, so you may be familiar with it from academia or when following the stock market. You might also have heard the market-clearing price referred to as the equilibrium price - both terms are used.
What you need to know about market clearing.
New classical macroeconomic theory assumes that if all buyers and sellers have access to information and there isn't 'friction' impeding price changes, then prices always adjust up or down to ensure market clearing.
If the sale price is higher than the market-clearing price, then supply will exceed demand, and a surplus will accumulate over the long term. If the sale price is lower than the market-clearing price, then demand will outstrip supply and eventually shortages will result, where buyers sometimes find no products for sale at any price.