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Eco 401 idea solution

Requirement: Being a student of economics, analyze the above case of ADBP carefully. Identify which concept of economics is applied in this case. Explain that concept and justify the reason of applying that concept.
After analyzing the above case of ADBP carefully, it is said the economies of scale and economies of scope concepts are being applied in this case, because when branches quantity increases in size for both loan and deposit accounts and expand its operations at declining average cost then ADBP enjoys economies of scope .

 Further as marginal costs of servicing both loan and deposit accounts decline dye to bank branches quantity increase which reduce operation cost ,leads towards greater cost efficiency for serving loan and deposit accounts, and enjoys economies of scale


In this case, Economics of scale and economics of scope concepts are applied. as per my knowledge, While bank branches in all size categories enjoy economies of scale, the extent of such economies is larger for branches operating at a smaller scale of production.

 When branches quantity increases in size for both loan and deposit accounts and expand its operations at declining average cost then ADBP enjoys economies of scope.

as per economies of scale which gives rise to cost savings through the joint production of loan and deposit accounts.

Further as marginal costs of servicing both loan and deposit accounts decline dye to bank branches quantity increase which reduce operation cost, leads towards greater cost efficiency for serving loan and deposit accounts, and enjoys economies of scale.

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