Many people think that the economy is a "fixed pie" that cannot change in size and, thus, any trade that benefits one person must come at the expense of another. Is this view correct? If it is the case that the pie can increase, is it feasible to think that the pie can decrease in size?

Suppose that Alex is more productive than Beth in all things, so that there is nothing that Beth can produce that's better - either in terms of quality or quantity - than Alex. Is there any reason for Alex and Beth to engage in mutually-beneficial exchange? Explain why or why not.

What are transaction costs, and why are they important? What are some examples of factors that either increase or decrease transaction costs.