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The market clearing price is determined by the supply and demand curves. It is the equilibrium price where the supply curve crosses the demand curve. One of the factors that will impact the amount supplied to the market is the cost of production. An increase in the cost of production will cause the supply curve to shift to the left. When the supply curve shifts to the left, at every market price, suppliers will be willing to supply a lower amount of the good. The result would be a higher equilibrium price and a lower equilibrium quantity. Suppliers will require a higher price in order to recover their costs — and therefore be willing to sell their goods.
At a price of $40, there will be excess demand. This is because at a price below the equilibrium price, there will be more people who want to buy the product than sell at that price.
At a price higher than the market clearing price, there is excess supply, not excess demand.
The market clearing price is determined by the supply and demand curve. While the cost of production does impact the amount that the suppliers are willing to provide at a specific price, a decrease in the cost of production would lead to a lower market clearing price, not a higher market clearing price.