I think the problem is that the rules were designed to hold up as a game system rather than to model reality. For example, getting a low-medium end kitchen knife is around $25 US. Top of the line deluxe "masterwork" knife is around $160 US. This is an increase of around 600%. Normal dagger is 1gp. Masterwork is 151gp, which is an increase of 15100%. If the real world worked like that, a superb quality kitchen knife would run over well $3500. ZOINKS!
However, consider if a masterwork dagger only cost 6gp. Why would anyone ever NOT buy one? Further, why would anyone ever buy any normal d6 damage weapon for that matter (the +1 to hit works out better on average than one additional point of damage average)?
In the real world, we are more constrained about the relative costs of our purchase vis-a-vis other items in the same category. $150 is nothing if you're looking at cars, but it doesn't mean you'll drop that on a knife.
In D&D, on the other hand, small amounts of money are truly insignificant. You WOULD always be willing to pay 6gp for a masterwork dagger over a 1gp standard one for three reasons.
#1 D&D adventurers are very wealthy compared to the general population only considering their starting gold for purchasing equipment. Where does all that wealth come from, anyway?
#2 D&D adventurers do not have to pay for day to day living expenses in which small costs would add up to significant sums if not kept in check.
#3 D&D adventurers by default have an incredibly vast disposable income as their career advances. Go into Bill Gates' house and I guarantee you that he has $160 knives in his kitchen, not $25 ones. The difference in cost at such small scales is irrelevant to him, as it would be to adventurers if masterwork costs were as in real life.
Unfortunately, these factors all contribute to make a truly realistic masterwork cost system completely untenable in a D&D game. The D&D economic model is fundamentally flawed in many ways.