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Heat loss or heat gain is a function of surface area.
(i) Small animals in colder areas have large surface area
(ii) They expend less amount of energy and do not loose bosy heat
(iii) Small animals are rarely found in cold regions
Which of the above statements are correct regarding the function of surface area?
A. only (i)
B. (ii) and (iii)
C. only (iii)
D. (i) and (iii)

Answer
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Hint: Two laws were given which correlate the size of an organism's body and other body party with the amount of heat loss and thus this decides the habitat they will be living in. As organisms living in colder areas must conserve heat in order to survive, their surface area by volume ratio has to be small. That means their body size must be large but body appendages should be small sized, this makes them conserve more heat and survive in colder habitats. The similar explanation can be given for organisms living in warmer environments.

Complete step by step solution:
 Small animals tend to lose body heat quickly in cold weather and must use a lot of energy to generate it through metabolism because they have a bigger surface area in comparison to their volume. Heat gain or loss is a phenomena due to surface area. This is the main cause of the rarity of very small animals in the arctic zone. All warm-blooded creatures experience heat production, and a few thermogenic plant species like the Eastern skunk cabbage, the Voodoo lily (Sauromatum venosum), and the enormous water lilies of the genus Victoria also experience it. Energy loss between trophic levels is the cause of this trend. The majority of the energy in food that organisms in a trophic level digest and absorb is released by them in respiration for use in cell activities. As a result, heat is lost.
Many creatures find thermoregulatory processes to be energy-intensive. Surface area affects the amount of heat which is lost to the surrounding or gained from the surrounding. When it's cold outside, little creatures (like shrews, hummingbirds, etc.) lose body heat quickly due to their higher surface area in relation to volume. As a result, they must use a lot of energy to generate body heat through metabolism. This is the main cause of the rarity of very small animals in polar regions.
So, option (D) is correct.

Note:
According to Bergmann's rule, creatures at higher latitudes should be larger and thicker than those closer to the equator to better preserve heat, and according to Allen's rule, organisms living at higher latitudes will have limbs which are shorter and thicker.