Are Digital Cameras Price Exhorbitant?

Could be based on number of units can be sold and the relative complexity of the units and their manufacture. The P&S units are fairly simple, few moving parts and limited electronics, and they sell a boat load of them. Something like an SLR, or in the case you site the OMD EM5, we're looking at a more complex machine which is more difficult to assemble since it has more precision parts, and they sell fewer units.

Whether that holds up to scrutiny is another question.