Because they are wanted. People like the idea of these man made animals.... staying as cute as a kitten forever. Munchin cats have a lot of problems though... Most animals that were not created by nature do.
Munchkins came from a naturally occurring genetic mutation. -- However, from every litter (even from 2 munchkin parents), some will be normal size, some will be munchkin. This is a result of whether or not the munchkin gene is dominant So that's part of why they are expensive. (Fewer munchkins) -- Another reason is that the breeding production is very small, since all munchkin breeders are strict about proper breeding protocol and DNA backup. Luckily, all predictions about spine problems or other medical issues have not come true -- so far. This is why they generally carefully breed a munchkin with a normal standard breed with no genetic issues, and only a portion of the litter are munchkins. So, again, fewer munchkin kittens, extremely careful breeding protocol = more $$. -- If you want more info: http://en.m.wikipedia.org/wiki/Munchkin_(cat)#section_1