A company has been producing a product for several years and has invested heavily in research, development, and initial marketing. Over time, the company’s fixed costs have been spread over a larger volume of output. As a result, the company’s per-unit cost has decreased, allowing it to offer competitive pricing while maintaining profitability. However, as competition intensifies and the market becomes saturated, the company is finding it increasingly difficult to lower the per-unit cost further without cutting corners on product quality.

Which of the following cost-related concepts best describes the situation the company is facing?