The economics of the art market are unusual when compared to other goods and services. Art has more in common with luxury goods which are not essential to survival, and the buying decisions of consumers are based more on psychology than rationality. That is why in some cases, the higher an item is priced, the more valuable it is perceived. For some fun Xmas-time reading, check out Thorstein Veblen's classic "The Theory of the Leisure Class", or "The Natural History of the Rich - a Field Guide" by Richard Conniff for a little funnier treatment of the psychology and buried evolutionary motivations behind the urge to pay too much for too little.
As to pricing...
The whole discussion of pricing artwork I think seems to come from two very different points of view:
The Brooks Jensen point-of-view seems to me to be oriented towards satisfying those artists whose primary motivation is to share work with as wide an audience as possible. So this means making it as easy as possible to gain access to the work, whether it be on the web or in the form of low cost inkjet prints. I think this orientation tends to lead the artist in the direction of lower-cost/higher volume production methods. The satisfaction comes from seeing many people enjoy the fruit of his/her labor. It is a very outward oriented point of view.
The other point of view is that the artist is engaged in a very personal pursuit, and that each image or work created is created first for the artist, and secondarily for the world at large. I think this point of view will cause the artist to place a high value on his/her output, since it represents a very private and personal expression. In other words, a large part of the satisfaction in creating art comes from the act of creation itself, and the need to share it with the world is secondary in importance. With this orientation in mind, it is unlikely that the artist will want to establish a low price for the work, since the a purchase by someone else is just icing on the cake.
In other words, it just depends on what races your motor. And just so people don't get the wrong idea, I am not saying that an outwardly focused artist is not interested in the process nor am I saying that an inwardly focused artist is not interested in gaining an audience. My point is that the relative ranking of those two factors in the artist's mind when deciding to put a price on all the hard work can determine where he/she lands on the pricing conundrum.