No, I don't think most people get the amount of money they should for a quilt, and I don't think most people ask what they should for a quilt. I think non-quilters have no idea of what goes into a quilt, and they think if they can get a store-bought one at Wal-Mart for $50, a lowly homemade quilt shouldn't cost them more than $20.
It's up to you how you want to approach this. The trouble is, when we ask someone for $50 for making them a quilt, we're teaching them that's what a quilt is worth, that's what a quilter's time and skill are worth. I think, as an exercise for yourself, I'd make a realistic estimate of the time it will take you to make the quilt (including shopping for fabric, pre-washing, pressing, cutting, piecing, sandwiching the top, basting, quilting, preparing the binding and binding the quilt), and multiply those hours by a skilled laborer wage, say $20/hour minimum. Add to that the amount for materials. Now you have a realistic estimate of what that quilt is worth (that your MIL probably thinks won't exceed $20). Going from there, you can ask whatever you feel comfortable asking; but that should at least eliminate the feeling of guilt you have when asking far less than the quilt is worth.
It's up to us to educate people in what goes into a quilt, or they'll keep thinking a quilt is worth $20.