Look at it from Google's point of view.
CompanyA has an ad that has a CTR of 5.0% and pays $0.10 per click.
CompanyB has an ad that has a CTR of 1.0%.
How much does company B have to pay to get above company A?
Well, google makes 50 cents from each 100 impressions on the company A ad.
So company B needs to generate google at least as much money, and for CTR of 1.0% that would be 50 cents per click.
Either way, google makes the same amount from each 100 searches.
That's a brilliant approach of an open market.
It's like an automated compromise system for multiple parties :)