-We were all beginners once, and purchased low end guitars.
-Mom and Dad are not going to purchase little Johnny a '57 Gold Top (original or remake)
-A smaller number will move up the to the $300-$400 range and probably do so a couple of times
-An even smaller number will play professionally and need guitars in the $1200 and up range.
-and finally the demand for guitars is not inelastic, an economic term meaning that as the price goes up, demand will fall off. Demand isn't a constant no matter what the price. This only makes sense in a tough economy.
I am surprised that acoustics sell more than electrics. I'm guessing that a lot of that is to schools, and the home shopping network that pushes out those Esteban models... lol