It determines the no. of channels are available in a specific band. We know there could be a maximum of 107 AM radio stations. If fidelity of AM radio is improved by increasing the upper-frequency 10kHz, we need to double the signal bandwidth, hence 53 radio stations. If we increase the AM band, we will lose some other band. The bandwidth of AM signals can be predicted by BW= 2fm
The carrier signal should be of minimum energy consumption. The stronger we modulate the more power has to be put into sidebands. Efficiency depends on how strong the modulation is applied.