Yeah more prosperity - more profit is good idea and very simple to implement.Imho the profit of workshops should be tied to the prosperity of the town, but should never be in a "zero" profit state.
It seems to me that TW attempted to make workshops depend on in-game market conditions, but it's very complicated and hence more error prone, buggy.
Fastest thing to fix the issue is just using doing [daily base income] multiplied by [town prosperity]. Yeah this will be less realistic, but at least would worked properly and less confusing.
IMHO, for the most players - the economic aspect of the game is less important. People who much into economic stuff usually play Tycoon-style games.