The economic analysis here is correct, as far as it goes, but there are a couple of other factors that are particularly important to our interests.

There are costs that are shared across several products, and that is where us lovers of MF or LF analogue processes are really suffering.

Take the film base as an example. If memory serves me correctly, it is not manufactured in the individual film sizes. Instead, it is manufactured in wide rolls, and then cut to size (and perforated where required). As a result, when there was huge amounts of 110 and 126 film and 35mm film being used, each format benefitted from the economies of scale of the others. Even the larger formats, which may use thicker materials, benefitted as well, because the resources (research and development, raw materials, skilled employees, advanced machinery, dedicated buildings and physical plants etc.) that were used for the more popular formats, could often be used as well, with just minor changes, for the less common sizes.

Unfortunately, with the market for the snapshot film sizes and snapshot development shrinking, the economies of scale are shrinking further. If they shrink past a certain level, products don't just become more expensive, they become financially impossible to produce. You cannot produce quality photographic film in temporary rented premises, with borrowed equipment, and part time or casual employees. You must have sufficient volume to maintain quality equipment, in suitable premises, and to keep fully employed the skilled technicians who actually do the work.