What happens to the Purchase Price when Preferred Vendor is unchecked?

I've set a purchase price in our Sandbox on an item; $2000.
Cost Estimate Type is 'Purchase Price'
Item Defined Cost is '$2000'
I have a preferred vendor set with price '$1000'

I've checked recent purchase orders, last purchase price, adjustments, transfers, receipts and bills... and nothing resembles the dollar value that overwrites the Purchase Price when I uncheck the 'Preferred' box in the vendor sublist. The purchase price changes from $2000 to $20.83.

When the preferred box on the vendor sublist is unchecked, what happens to the Purchase Price - where does the new value come from?

------ So here's more info based on testing today ------