Question

Which of the following economic fundamentals was the pre-cursor to the massive increase in residential real estate prices in the Silicon Valley (and San Francisco) area?

		External Economies of Scale caused by factors like Knowledge Spillovers in the tech industry.
		External Economies of Scale caused by larger and large manufacturing facilities.
		Internal Economies of Scale caused by factors like Sharing a Labor pool in the tech industry.
		Internal Economies of Scale caused by secondary suppliers in the manufacturing industry.
		All of the above.

Answer 1

All of the above.

( silicon valley is a global centre of high technology and innovation. Real estate prices rose to unprecedented levels during 2007-2008 in silicon valley. Still, housing prices are pretty high there. These high housing prices can be attributed to economies of scale - both external and internal. External economies of scale was resulted from knowledge spill overs and the existence of large manufacturing facilities. Internal economies of scale resulted from factors like sharing a labor pool in the technical industry and the working of secondary suppliers in the manufacturing industry.)