A Car manufacturing business found that it has high fixed costs due to its need of a large factory in which to produce the cars and store them until they are dispatched out. It also needs several thousands of components of equipment to make the car and assemble, etc.

Many factories like this will tend to run triple shifts because if the facility has purchased the expensive machinery it can't afford to not have it running. Due to these high fixed costs, the barrier to entry is higher and so there are fewer competitors in the space.

As a result, if a company can get to a point where they are manufacturing above the costs of operating and owning/renting their plants the car manufacturing business can prove to be a very lucrative one.

Questions:

1. Suggest to the management whether this type of fixed cost would increase together with the business? Why?