I get that question alot with my Bike Friday. I tell the inquisitors, "Bike Fridays come in a variety of models at a variety of prices. It depends on what you want in a bike." They usually don't pursue the line of questioning any further. If they do, something like, "Oh, I had to save up for it" satisfies them that yes, it costs probably more than they want to spend, but also indicates that I don't just spend wildly, which is really what they want to know anyways. People are so sneaky and wiley.

When I commuted to work, I would get that question, and the "alot less than a car" response shut them up really fast.