Socially optimal output is to marginal cost as actual output is to what?

Socially optimal output refers to the level of production where the benefits to society are maximized, and this is found where the marginal cost of producing one more unit equals the marginal benefit that society receives from that unit. In contrast, actual output can be compared to the price that consumers are willing to pay for a good or service. This means that while socially optimal output focuses on balancing costs and benefits for the whole society, actual output is determined more by the market price that reflects consumer demand. For example, if a company produces 100 toys and the marginal cost of producing the 101st toy is $10, but consumers are only willing to pay $8 for it, the actual output is less than socially optimal because the cost exceeds the benefit to consumers. Understanding this difference helps businesses and policymakers make better decisions about production levels and resource allocation.