Lets say several big-guys bid $1 per click for ring tones (broad-match), and I bid .03 per click for: [Beatles ring tones for verizon phones] (exact-match) If someone searches for the exact phrase Beatles ring tones for verizon phones, will my ads appear after the guys who bid $1 above? Thanks.
Google will cycle through the ads and the click through rate (CTR) will factor into who gets their ad displayed. There will be a number of factors but you should win on CTR.
You may not necessarily beat a $3 bidder if you are only paying 0.03 cents as the rank is determined on both CTR and bid per click. You might beat a lot of bidders in the mid ranges which is better from a quality CTR point of view, as the top 1-3 rankings are generally clicked by anyone, but if someone clicked on say position 6-7, it is more likely they have read your ad and will be a higher chance of following through with your product/service.