I think the red flag comes up with a price that low because it would be hard for a breeder to even break even on a pairing on an average sized litter. While the majority of reputable breeders are not in it to make money, they are not intending to lose money either. A responsible pairing can be extremely expensive to breed between costs to finish a dog to CH, stud fees, vet visits, health tests, whelping costs, etc. (some of the breeders on the board could give a good estimate of how much it actually costs, but from the breeders I know, very few break even). You should ask a breeder WHY they breed their dogs. What are they looking to accomplish?
A second red flag about this particular breeder is that she only breeders her dog together. She is not making an attempt to "better" her lines, and those dogs are far from perfection. Most reputable breeders spend a lot of thought, discussion, and research looking for a stud or female to better their lines and compliment their dogs faults. There is no "perfect" dog and part of bettering the breed is finding pairings that do just that.... improve your lines through health and type.
Merkle had 4 litters on the ground last I looked a month or so ago because I was also curious of this breeder when I was looking for a puppy. If you average the litters at 7 dogs per... you are looking at 28 puppies and that is being quite conservative. I find it hard to believe she could fit my family with the proper puppy or have the time to really get to know each puppy to find out their temperments. I spoke to her on the phone and she did seem knowledgeable, but completely careless about where her puppies went. She asked no questions about my home situation, my plans, etc. She just was trying to sell me a puppy. That was quite concerning to me and I decided not to go that route.
Here is a website with some great links about what a Reputable Breeder is:
Breeder/Breeding Information