Meat (ton) Palm oil (ton)

Malaysia 40 30

Indonesia 50 100

a. What is the trade value of 1 ton of meat for palm oil in order for trade between Indonesia and Malaysia?

b. If a country exports 1000 tonnes of meat with an agreement that 1 ton of meat is exchanged for 1.25 tonnes of palm oil, calculate the trade profits of each country. Are the theory of comparative advantage and international trade practice able to improve the welfare of the two nations? Explain.