PLENTY of people pay $35k for a Prius. We paid $26k for ours. Remember...they sell all of them they can make.
The $35k prius has a lot of equipment, LED headlamps, radar cruise, lane keep assist, keyless entry and start, nav, backup camera, leather, heated seats, 17" wheels. Its a lot of car. You can't find one, they are all spoken for. Most people buy package III or Package IV Priuses that sell between $27k-$30k. Next hardest car to get is the IV with the solar roof which is like $32k.
The Prius is not an economy car, its a midsized car that is similar in interior room and cost to something like a Camry or Accord.