If the actual output level in a market is lower than the socially optimal output level, this implies that there are no externalities affecting the market's efficiency.

When the actual output level in a market is lower than the socially optimal output level, it usually indicates that there are issues affecting the market's efficiency, such as externalities. Externalities are costs or benefits that affect people who are not directly involved in a transaction. For example, if a factory produces less because it is trying to avoid pollution, the community may suffer from a lack of jobs or goods, even though the factory is trying to be responsible. In this case, the lower output does not reflect the true value to society, which would be higher if the factory could operate more efficiently without harming the environment. Therefore, the presence of externalities often leads to a situation where the actual output is less than what society would ideally want.