In a competitive market, what is the relationship between socially optimal output and actual output at market equilibrium?

In a competitive market, socially optimal output is the level of production that maximizes overall welfare for society, balancing the benefits and costs of goods and services. However, actual output at market equilibrium is determined by the forces of supply and demand, which may not always align with the socially optimal level. For example, if a company produces too many goods that create pollution, the social costs of that pollution aren't reflected in the market price, leading to overproduction. This means the actual output might be higher than the socially optimal output, resulting in negative effects on society, such as environmental damage. Ultimately, when there is a difference between these two outputs, it indicates a market failure that may need intervention to correct.