The correct option is "1 only." Water vapor is indeed a gas, and its concentration decreases with altitude due to lower temperatures and pressures in the upper atmosphere, which limits the capacity for moisture to remain in vapor form. On the other hand, statement 2 is incorrect as the percentage of water vapor is not maximum at the poles; it is actually highest in the tropics, where warmer temperatures promote higher evaporation rates and thus greater moisture content in the air. Understanding these concepts aligns with the UPSC curriculum, which focuses on atmospheric science and the role of water vapor in weather and climate.