In the ultimate fair play move, Google makes it so that you can compete with large advertisers on some scale at least. A highly competitive keyword can have $5.00 (or even more) cost per click, but can you get a return on that kind of investment? If it takes say 50 clicks to get a sale, you paid $250.00 for that single sale. Depending on what product you're selling that may not be worth it at all. That ROI number depends completely on your conversion rate, and your product price, both long and short term. The good news: raising your conversion rate can now make your advertising less expensive.
I saw this first hand while advertising my hosting services. When I first started running Adsense ads, I would start of at $0.25 per click limit and then within a day to a week it would be up to $1.00 or $5.00 minimum bids. So I'd stop running and try something else and come back and do it again, doing the same thing. (Kind of makes you think of that insanity definition.)
Then I observed that if I just redesigned (reworded) the ad, or changed the url that it was linking to and came back to it a day or two later the ad was running again. Google was raising my prices because the ad was not performing well. I assume they measure this by looking at bounces. Meaning if someone clicks my ad and comes back to Google seconds later, it means the ad and the page that it clicked through to were not relevant to what I was advertising nor what the user was looking for.
Not only does this level the playing field on a NATIONAL advertising campaign, but it shows you almost immediately whether your ad is working! Google is telling you, your ad isn't working, we'll still deliver it for you, you'll just have to pay more, your choice. This is something no other advertising media is going to do for you! Google, in there outstanding vision, realizes that end users need to have a good experience and rewards advertisers who provide it. So when you see, "Your ad has been deactivated unless you raise your minimum to bid to $5.00". Take that has a blessing, that you were notified your advertising can be better.