In classic supply and demand analysis, increased supply will result in reduced prices and decreased supply in increased prices -- at any given level of demand. Similarly, at any given level of supply increased demand will result in higher prices and decreased demand in lower prices. This is why CPC rates for search campaigns have become so damn high -- demand is high, and supply is being limited.
The reasonable question is "if search engines want to make the most money, then why not always list 10 ads on every search engine results page?" I always knew that the search engines (well, Google anyway) used scarcity tactics to make the most money, but I'd never actually done the math. It seems Brad Libby at The Search Agents has. You should really check out his post for the details, but here's the punchline: