No confusion. I've been through this with several accounts I helped manage. Once an account has a history of low CTR the CPC goes up. Starting a new campaign doesn't help; the CPC stays high until you can get the CTR back up. And that costs dearly.
But again, that was years ago. Things may have changed.
Unfortunately, things have not changed. You are 100% correct. If anything, things have gotten worse, because now we have even fewer options to manage accounts.
It’s on Google’s end. “I have inventory (a placement) to sell to an advertiser. I can sell it to X with a CTR of (10% or 1%) and a CPC of $0.50 or to Y with a CTR of 3% and a CPC of $1.”
Whether X’s CTR is 10% (what it used to be) or 1% (what it is now) drives the decision of which ad is better to serve in that inventory slot.
But again, that was years ago. Things may have changed.