The economy probably has a little bit to do with it. Another thing to keep in mind is that MAC gives away or deeply discounts a TREMENDOUS amount of product. MAC MAs get 60% discount. In other words, an ES which costs you $15, will cost a MAC MA $6. MAC makes up for that profit loss by charging you the full price (and raising that when they need more money, thus the price increases). Aside from the discount, MAs get gratis with each collection. This is generally 4 or so products from each collection for free. The consumer makes up for that profit loss.
MAC provides samples or entire collections to certain blogs all over the world. You pay for that profit loss to MAC.
Additionally, MAC is known for providing a ton of free makeup and artists to fashion shows, film and other media. They do this for exposure. They disseminate as much product as possible for free to these folks so you, the consumer, get exposed to it and want to buy it. They say they don't advertise, but they do, They just don't do it in the traditional manner of placing an ad in a magazine. They do it by showing up at Fashion Week or in movie credits.
The expenses all trickle down to you, the consumer.