You've answered your own questions regarding the cost: more labour means there is potential to price an item higher (both from the perspective of the actual higher labour cost, and also the perceived added value of being more artisanal/"special" somehow, thus boosting what price the market will tolerate). If by quality you mean durability/lifespan, that's impossible to answer absolutely as it depends on the skill of the hand knitting vs the quality control of the manufacturing process. There's intrinsically going to be more scope for variation in a hand knitted product than a completely machine manufactured one. However, generally, I suspect the only handknitters left in (remotely large-scale) business are the old heritage brands where a high price has historically been placed on creating a good product.
Virgin wool simply means wool spun for the first time as opposed recycled wool. It's certainly superior (stronger/more durable) to recycled wool as the fibres are longer, but I've always assumed its usage these days is more of a marketing term as my hunch is that little recycled wool gets turned into clothes these days. I might be wrong about that assumption and would welcome more information/correction.
