Originally Posted by RPT
You, Sir, is one of the most dishonest persons I have met on this site.
Corrections: One of the few dishonest. I do not believe you don't understand the difference between the average and the marginal.
First of all, you've been reported for name-calling. (The fact that you will descend to that says more about you than me.)
If, as someone else was suggesting, you were making the case that employee-related costs -- e.g., hiring, training, coming up-to-speed on productivity, accommodation, etc expenses -- could affect average wages (e.g., increase it from the current $1.75 equilibrium), you might actually have a case. Even then, one would have to trade off the net additional per-worker-hour costs of that against the gains from overtime per-worker-hour-costs saved.
Instead, you claim that "in the limit" fixed costs go to zero when you add more labor hours/volume. They don't. You have to account for the fact that you will use the machines more (they depreciate faster; they need more maintenance; there will be greater downtime), you will create more wear and tear on the building (e.g., straining building infrastructure such as HVAC systems, plumbing, waste/pollution handling, keeping the cafeteria open longer) that the lessor will want additional compensation for, you use more electricity/energy, you need a greater support staff (e.g., cafeteria workers, custodial staff, secretaries, supervisors) generate more waste/pollution/emissions etc. The key point you seem to be missing is the following: Any such additional costs imposed on fixed assets would be the same regardless of whether they came from the same worker working for an extra hour or from a new worker working that hour.
Moreover, your fixed assets don't come free "in the limit". Beyond a point, as volume increases (whether from the same employee doing overtime work or an extra employee was doing that work in place of the overtime worker), you will need a step change in investments in fixed assets: in other words, the investment in fixed assets changes as a "staircase" function of volume.
If anyone has trouble keeping his ideas of average versus marginal costs straight, it really would appear to be you.