The economy of the islet-de-San-Pedro is expanding: the utilization rate of production capacity is the highest in the country's history, and the surveys indicate that companies anticipate improvedeconomic conditions in the coming year. However, with wages not rigidly rising, the effects of the expansion on employment in the islet-de-San-Pedro are limited. Below illustrates the effects of the expansion on the islet-de-San Pedro labour market. Before the expansion begins, the equilibrium is given by the labour supply O and the labour demand D1, as wellthat the equilibrium wage rate is $16 and the employment level is 300 employees.