Explain how does a Google auction work?

Once a user shoots a query in Google search box, the search engine processes the request and runs an auction. It checks the keyword entered by the user and if one or more advertisers are bidding on that keyword, then auction in triggered. Once the auction process starts, Google looks upon various parameters such as advertiser’s quality score which includes CTR, ad relevancy, etc and maximum bid given by the advertiser. The ad with the highest ad rank (maximum bid x quality score) wins the auction and the ad is displayed in first position. The SERP contains 7 ad positions and the auction process decides the ads position of each ad run by different advertisers.