The correct answer is option 3, hydrated ferric oxide. Rusting of iron occurs when iron reacts with oxygen and water in the presence of moisture. This reaction leads to the formation of hydrated ferric oxide, commonly known as rust.

Let`s analyze the other options to understand why they are incorrect.

Option 1, ferric hydroxide, is the incorrect answer. Ferric hydroxide is formed when iron reacts with an alkaline solution, such as sodium hydroxide. It is not the cause of rusting.

Option 2, ferrous oxide, is also incorrect. Ferrous oxide is a compound formed when iron reacts with oxygen, but it does not involve water or moisture. It is not responsible for rusting.

Option 4, hydrated ferrous oxide, is incorrect as well. Hydrated ferrous oxide refers to iron oxide that contains water. It is not the primary product of the rusting process.

Therefore, the formation of hydrated ferric oxide, option 3, is the most accurate explanation for the process of rusting in iron.