Let's evaluate the statements one by one:
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Total fixed cost is always increasing as production increases.
- This statement is incorrect. Total fixed cost (TFC) remains constant regardless of the level of production. Fixed costs do not change with the quantity of output produced.
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Marginal cost is the change in fixed cost divided by the change in quantity from one unit of output to the next.
- This statement is incorrect. Marginal cost (MC) is defined as the change in total cost (which includes both fixed and variable costs) divided by the change in quantity. It is not calculated using only fixed costs.
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It is necessary to know the total cost to calculate marginal cost.
- This statement is correct. Marginal cost is derived from the total cost, specifically, it is the change in total cost when one additional unit of output is produced. Therefore, understanding total cost is essential to calculating marginal cost.
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Marginal cost is always negative as output increases.
- This statement is incorrect. Marginal cost can be positive, negative, or even zero. Typically, as output increases, marginal cost is positive due to the law of diminishing returns, meaning that each additional unit of production incurs some additional cost. Marginal cost being negative would imply that producing more units reduces total costs, which is not the norm.
In summary, the correct statement among the provided options is: It is necessary to know the total cost to calculate marginal cost.