Ever need to buy fresh thyme/bay leaf/parsley for a bouquet garni? Or lots of vegetables to make a sauce? Or if something calls for a chicken/beef/vegetable stock, even if I make it myself to save myself from the pre-packaged brands, it'll cost a few dollars per serving on top of the other ingredients that go into a meal.
plenty of people are simply abysmal at any form of 'cooking' more complicated than a microwave. the list of skills you could learn that would save you a couple bucks here and there is far longer than your arm. we can't expect everyone to have every money-saving skill, or the time to actually put them to use.
(yes, everyone eats food so that seems like an 'obvious' one, but everyone also uses indoor plumbing, electricity, has a roof over their head, etc, and i hear far fewer folks suggesting that we all learn roofing.)
Frankly, as an "immigrant" to the big city, I found myself constantly flabbergasted by the things most people couldn't do that we'd just sort of taken as said back in my little Northern Ontario mining community. Hell, I even remember a minor rush on the documents supply trade when someone decided you weren't allowed to wipe your solder joints anymore when plumbing (there wasn't a plumbing code book to be found for miles around for months). Yeah, there was always that guy who couldn't swing a hammer to save his life, but he'd almost always know what to do even if he couldn't do it himself.
You're right. I live in San Francisco and eat high quality, fresh ingredients. I'm guessing that there are enough people like me to support frozen $7 to $10 meals.
I highly doubt that a prepackaged frozen meal that costs $10 is going anywhere near as tasty as what you can make at home for $7 a meal.