NCERT Biology Class 12 page 127: "There was no atmosphere on early earth. Water vapour, methane, carbon dioxide and ammonia released from molten mass covered the surface." So #2 is wrong, CO2 was present, we are left with a or c. In both options first statement is correct but experts were divided over third statementbecause early Early atmosphere of earth had no free oxygen, the (life) forms until then could at best be only "anaerobic". So those living organisms did not have capacity to alter the atmosphere, atleast not in a significant manner. Accordingly, some ticked 'a' while others ticked 'c'. UPSC has kept 'c' as the official answer.