Solution
Option 1 -> Marginal Cost measures the cost of producing one additional unit, but it doesn't necessarily increase with production.
Option 2 -> Total Fixed Cost remains constant regardless of output level and does not change with production.
Option 3 -> Total Variable Cost increases because producing an extra unit requires additional variable inputs like raw materials and labor.
Option 4 -> Average Cost may increase or decrease depending on economies of scale, not guaranteed to increase.
Hence, Total Variable Cost -> When production increases by one unit, more variable resources (labor, raw materials, energy, etc.) are consumed. Since variable costs change directly with output level, total variable cost will increase. Fixed costs remain unchanged, while marginal cost represents the change itself rather than what increases. Average cost behavior depends on the scale of operations. -> correct