It's also much more expensive to produce an i7. i7 are near perfect chips and are able to run higher clock rate efficiently and safely while i5s are more "standard" and have their performance clamped down to what they can safely handle. There are less i7 chips rolling off the lines, which increases their price.

Hopefully somebody who knows more about this than me can jump in and fill in the blanks here.

EDIT: I communicated my point poorly and the comments below mine explain this is much clearer terms