One problem I see with that analysis is this part:
After all, workers are producing 20% more, so the amount of profit from hiring an extra worker increases by 20%.
If demand isn’t being met, or if it’s elastic, then increasing your production = increasing your profits. But if demand for your product is not elastic, increasing your production will just leave you with unsold product and decrease your profits; you’d make more money by using those new machines to reduce your work force.
I was making tea. I poured hot water into a travel mug. The interior sides of the travel mug were silver. The liquid looked yellow. (Before I put the tea bag in.) To see if the yellow contamination had come from the kettle that I had heated over the stove, I poured some of the remaining water into the sink. That water was clear, with no evidence of a yellowish tinge. The mug had been taken from a cupboard of clean dishes. I was fairly certain I had looked in the mug before using it and seen that it was clean. After seeing the yellowish liquid, I still saw no other indication that the mug might have been dirty (no gunk on the inside or outside). Just the mysteriously yellow liquid.
Guvf jnf n onq pnfr bs zbzzl oenva. V cbherq ubarl vagb gur obggbz bs gur zht svefg, gura sbetbg V unq qbar gung ol gur gvzr V cbherq gur jngre va. Gur ubg jngre vzzrqvngryl qvffbyirq gur ubarl, naq vg tnir gur jngre gur lryybjvfu gvatr. V fcrag svir zvahgrf gelvat gb engvbanyyl qvntabfr gur ceboyrz orsber erzrzorevat nobhg gur ubarl.