The correct explanation for why each level of the energy pyramid is smaller than the level directly below it is:
Because 10% of the energy at each level moves to the next level and some additional energy is converted to heat.
In ecological terms, this is known as the "10% rule," where only about 10% of the energy from one trophic level is transferred to the next level. The rest is lost primarily through metabolic processes and is often dissipated as heat. This is why energy pyramids are typically narrower at higher trophic levels, reflecting the energy available to support fewer organisms.