Final answer:
Producers indeed consider the cost of producing an item and consumer demand when determining the quantity to supply, as these factors directly affect the profits a company can make. The statement in the question is therefore True.
Step-by-step explanation:
The statement that producers determine the quantity to produce and supply based on the cost of producing an item and consumer demand is True. Producers analyze the cost of production, including the use of labor, materials, and machinery, to calculate potential profits. In addition, the consumer demand for a product influences how much a producer is willing to supply. For instance, when consumer demand increases and exceeds supply, prices usually rise. This can lead to higher profits, encouraging more producers to enter the market and supply a greater quantity of the product.
Moreover, a decrease in production costs can increase a firm's profits if the selling price of their good or service remains stable. Consequently, the company is motivated to produce and supply more because this results in greater profits. The supply curve can graphically display this change, typically shifting to the right to indicate a larger quantity supplied at any given price. Therefore, understanding the interplay between costs, consumer demand, and the resulting profits is crucial for firms when determining how much to supply.