What is the primary role of government intervention in achieving socially optimal output compared to actual output within an economy?

The primary role of government intervention in achieving socially optimal output is to correct market failures that prevent the economy from producing goods and services at the most beneficial level for society. In a free market, companies may produce too much of harmful products or too little of beneficial services because they only consider their profits, not the overall impact on society. For example, if a factory pollutes a river while making a profit, the government might step in by imposing regulations or taxes to reduce pollution, pushing the factory to find cleaner methods. This intervention helps align the actual output with what is best for everyone, ensuring resources are used efficiently and equitably. Ultimately, the goal is to create a balance where both the economy and society benefit from the production of goods and services.