I think I am saying much the same thing as one post above: it is priced relative to usefulness for a small group of people predominantly engaged in slaying other creatures, but usually either near water or with the magical ability to create it in sufficient quantities.
The fact that a supply of that particular item, for example, could revolutionize a society, change settlement patterns, and allow a whole host of hygiene problems to be skipped over as cities modernize is not really considered at all. Such an item could easily be priceless, so regardless of the cost to produce it, you would expect it to be at the high end of the “magic market”. The idea that any sword, no matter how powerful, could possibly be of more significance than the decanter is ludicrous if you use a perspective emphasizing the impact of magic on a society. The prices, and even the bulk of the items commonly made, show zero interest in this approach, though. It is weird, I agree completely. It requires far more suspension of disbelief to me than simply accepting monsters, magic, even undead. I would guess most players don’t particularly care, though. Nobody is playing for the purpose of experiencing the free market effects of magic, after all.