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The temperature decreases as the height from the Earth`s surface increases due to two reasons mentioned in options 1 and 3.
Option 1 is correct as the heating of the atmosphere happens mainly from the Earth’s surface. The sun heats the earth`s surface, which in turn heats the surrounding air causing it to rise, consequently cooling the air at higher altitudes.
Option 3 is also correct because as altitude increases, the air becomes less dense. This lower density means fewer air molecules to absorb and re-radiate heat, therefore the temperature decreases.
Option 2 is incorrect as the presence of moisture doesn`t influence the temperature gradient with altitude. Typically, the amount of moisture in the form of water vapor decreases with altitude, not increases.
Hence, option 3 "1 and 3 only" is the correct answer.