The difference in prices between guitars, generally speaking, comes down to cost and mark up.  You pay for the price of materials, the labor that goes into the build and finishing, the labor rate, the machinery used, the overhead and the reputation.  It cost money to tool up, have a building and a staff.  
 
A guitar company is not going to sell you a guitar for less than it took to produce it and I can't see them overly inflating prices to keep people from buying them.  I believe that most businesses are in business to sell products and stay in business.  Yes, I believe Squiers are built to sell in mass at a lower profit margin, while Custom Shop Fenders are made to attract a different buyer, who pays for more attention to detail and a higher guarantee of getting a finer quality instrument.  In the end, the sale of both ends of the spectrum have to balance out to create a profit, ....or the business folds.  
 
I believe in these times, with the use of CNC's to mill out most of the parts to our instruments, the quality and consistency, has been greater than ever before.  I believe that is why a lot of people think there is less difference's between foreign made guitars and USA made instruments.  The differences, in my oppinion, are noticed in the details, finishing and the consistency of a great instrument.  The 2013 Gibson Les Paul Studio that I just acquired recently, has been one of the best made LP's that I have owned to date; and I have owned many.