ok, it's a dumb question but I'm new. I have a very low budget and I am tempted to bid on high paying words. Common sense tells me to stay away but then I am thinking it must be high CPC because it works... But then it probably only works for people with very high budgets that can get hundreds to thousands of clicks a day where I can only afford a few clicks. Am I correct? Should I stay away?
Start low and move up. There are a number of cases where I see a minimum of .1 or .2 an I move up to those numbers and end up getting charged less than those minimums. If you have good content and some page rank you might get some good traffic with a lower budget.