The point is, for the example you have, the difference is not 20% and that price difference is important in the tradeoff. I agree with you, if people knew the quality was significantly better for +20% then they'd probably choose higher quality. But if the difference is 400% then no, lots of people aren't going to pick higher quality as it's out of their budget, period.

A BMW/Mercedes might be a more quality car than a Kia but someone that only has a budget for a Kia isn't going to even consider a BMW/Mercedes for 2x to 8x more.

On top of that "quality" is subjective. I might agree that a Macbook Air ($999) is better than a $300 window laptop (there's tons of them) but both the Kia and the $300 Windows laptop will serve people's needs. a Kia will get them to/from work. Let them transport their kids. Etc.. A window laptop will let them browse the net, view youtube, write a resume. It's not like the Kia and windows laptop are useless. Plus, for the laptop, they can get 3 of them for the price of 1 mac. So everyone in the family gets one. It's like buying a Vizio TV for every room instead of one Sony TV for one room.