too high to clear the market?

Lana Uliano: I've never heard that phrase.

Leontine Kreitz: This refers to prices. The "market clearing" price is the price highest price that people will still buy the product/service. Example, the market clearing price for a fast food hamburger is around $2.89. If you go higher than that, you better be in a different market. A different market is the high-end steak houses, like Ted's, John Elways, Morton's, etc. They can charge more, because the market price for hamburgers in that market is closer to $12.Why doesn't McDonalds sell $12 burgers like Mortons? Because they aren't in the same market place. So they must make the best burger you can for $2.89, the clearing price. Fortunately for them, the market clearing price for drinks is $1.09, and fries, are .89, so you get the idea. Any higher and you don't sell, any lower and you lose money....Show more