If pump lowers water in the well to a point at which the pump loses its prime, either: Next check the yellow to red and yellow to black. These reading should be very low, 2 to 12 Ohms. It needs to be just right which is 2 pounds less than the start pressure of the pump, measured with the tank drained and the pump off. The yellow is common and the yellow red start should be more than the black run to yellow.
Chlorinate the well with a few 10 or so chlorine pellets or a few cups of liquid bleach.
Diagrams --Typical Pump Installations
I would add a valve so if the hose springs a leak you can turn it off. Do not pound on it forcefully. When in doubt, always consult a professional. The pump will pump the water out and onto the ground. A circuit breaker controls the flow of electricity to your house, and the well should be on a separate switch. If they trip out, check the amp draw.