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Why temperature drops as altitude increase
Read Atmospheric air pressure.

There are two points you need to know.
1. When the air is compressed, it gets hot in other words its temperature rises.
2. When the air is expanded, it gets cooler in other words its temperature drops.

Here are some basic examples:
                                   1. Cycle hand pump: When you press the handle down you actually compress the air. Due to this the
                                       temperature of the air inside the cylinder increases and the pump gets hot. Try it !

                                   2. Internal combustion engine: The heat is produced by compressing large volume of air into relatively
                                      very small volume using pistons. This heat is used to generate power by  injecting fuel or by starting

Now. You know that the atmospheric pressure is high near Earth's surface and low at higher altitudes. (Read Atmospheric air pressure) This means the air is more compressed near earth’s surface than at higher altitudes.

Since the air is compressed at earth’s surface (low altitude) than at higher altitudes say a mountain, the temperature is high at low altitude.

By law, At Constant Volume, Temperature is directly proportional to Pressure. So as the pressure reduces and temperature also reduces.
Note: This is not the only reason for this temperature effect. There are other factors like wave reflection etc. We will discuss them in other topics.

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