How does government intervention aim to improve economic surplus in the context of welfare economics?

Government intervention aims to improve economic surplus by correcting market failures and ensuring that resources are allocated more efficiently. When markets operate without intervention, they can sometimes lead to situations where some people benefit significantly while others do not, creating inequality. For example, if a factory pollutes a river, it may lower the quality of life for nearby residents but increase profits for the factory owner. By implementing regulations, like limiting pollution, the government can help ensure that the costs of production reflect the true impact on society, leading to a greater overall economic surplus. This way, everyone can benefit more from the economy, and resources can be used in a way that maximizes overall well-being.