Microeconomics

Conventional economics asks how agents’ behaviors (actions, strategies, forecasts) would be upheld by—would be consistent with—the aggregate patterns these cause. It asks, in other words, what patterns would call for no changes in microbehavior, and would therefore be in stasis or equilibrium.

Thankfully there is a broader point: One crucial role for government in a market economy is dealing with externalities—those cases in which individuals or firms engage in private behavior that has broader social consequences.