Adsense Keyword targetting - How is it done?

[peepin2me]

I'm new to adsense and have a couple of queries regarding ad targetting on a webpage.

Say, my webpage has 10 different keywords, the ads served by google will be the ads for the highest paying keyword among these?
or
Does google rank keywords based on importance (using an algorithm) and show ads for the most prominent/important keyword?(even if it happens to be the lowest paying keyword)

Also, when a phrase has keywords X Y Z...
Assuming the keyphrase XYZ has low paying ads compared to the keyphrase XY (without Z). Will google still serve ads for the entire keyphrase ie. XYZ or will it serve ads for the higher paying keyphrase XY?

Thanks in advance for sharing your knowledge

[radix]

You can control - to some degree - ads for which keywords get pulled for your page/site. Search for Section Targeting, or visit right this page:
[google.com...]