How elitary is silk ? Is there sufficient demand ?
Ok, there we have real silk, 10x the price of fake silk. .. and still, both products are around in abundance and very popular. There is a considerable market for real silk too.
Having passed that one, we can conclude there is demand and a good price, the first questions to answer: is the price of raw silk, or silk coccoons actually relevant for the price of consumer goods ?
First, I need to debunk something,
No need to worry about excessive labour costs
There exist production lines for silk. One of these machines is this one from China, 50k and you're in
Price of coccoons is indeed relevant.. in Japan
Price really depends on the market, in case of silk. A common, true silk Kimono will set you back 300 to 500 dollars in Japan, and 500 to 1500 dollars in the US, depending on quality.
It takes 4000 silk worms (larvae of a moth) to produce a Kimono. Don't buy them online in small quantities, there are a lots of hobby shops with galactic prices.
Silkworm cost.. better to say coccoon cost has been low in China for some years now, 53 dollars per kilogram. As one coccoon weighs about 2 grams say 500 coccons/kg, you'll have your 4000 silk coccoons for about 425 dollars, which approaches the price of an average silk Kimono in Japan. Conclusion: coccooon cost does matter ! When you dont want to farm the larvae and feed them, before getting your coccoons, there is very little margin in Japan. In the US, it may work. In any case, the silk coccoons are a (very) relevant part of the silk price.
Large part of the silk cost price is related to Mulberry leaves. In terms of cost price, our Kimono requires 400kG, which is about 100 dollars cost price in India, a minimum of 25% of coccoon value is leaves. This is expensive food.
Does coccoon size matter ?
A larger coccoon will yield longer fibers. That is good. But thicker fibers may not be appropriate.
In one of the comments, the square cube law was mentioned by @notovny. A coccoon is hollow, when the animal has a larger volume, your area yield lags behind. This is only partially true for coccoons. A coccoon will need to be thicker, to carry the weight - hanging - when the animal is heavier. Larger moths will produce larger and thicker coccoons. But they will also need more food !
Bigger moths and coccoons impact on traditional production
Keep in mind silk has a production history of thousands of years, and the silk coccoons are for a large part still produced in the traditional way. Introducing coccoons 10x current size would require manufacturs to change a long proven technology. Introducing moths 10x current size will have even more impact, facilities need to be upscaled, particularly when coccoons are produced inside the factory.
There is demand, cheaper production could lower consumer prices as well. Production cost of coccoons is relevant for prices in Asia, coccoons make up large part of the price of silk cloathing in Japan.
But I think the answer to the size question is "no". A larger silkworm will either not, or negatively, impact the price of coccoons, calculated per kG of Mulberry leaves. Sizing up the silkworm isn't worth the trouble.