smallcompany - 5:06 am on Sep 23, 2011 (gmt 0)
So the question is, given the CTR on ad 2 is 65% higher (24.67% versus 14.90%) than ad 1 why is CPC only 7% lower?
If you want to keep this technical, and do some testing in order to get more "meat" for your further thinking and possible discussion, you may want to pause the ad with lower CTR and see what happens with the other one in regards of cost and other measurements. You also watch (note down) the QS for given keyword (or keywords). Then, you may want to do the same thing otherwise (pause better performing ad) just for the sake of testing, and again, note down QS and other numbers. Then compare all what you have (1 against 2), plus all to what you already have.
If you want an opinion which is why you came here, I can tell you that Google AdWords' algorithm (oh my, how scientific that sounds) is there to make a profit for Google Inc. This Inc. is very important to keep in mind as many think about nice times when university guys finally did something good which overwhelmingly received support from (knowledgeable) web community. That was the time when they were not driven by profit like today.
In other words, if that beast (algo) decided to make so much money on that particular keyword, you're going to pay it if you want to be there and get the traffic.
The principle of setting the price based on the history of the keyword in overall and forcing you to pay $1 per click even if your ad is the only one there is not a marketing thing, but actually a setup for whatever they planned to earn. Some call it a rip off.
Interestingly, there is some talk going on about "setup" on quite high level:
Please don't get me wrong that I dispute Google's paid search concept about comparing ads and favoring them based on results. It is just that I don't trust them, and that I don't believe software can do something like that in a fair way these days.