Which situation shows the correct order of the colors in a rainbow?

  1. Case 1
  2. Case 2

Case 1 is correct. Light refracts into spherical water droplets in the sky, reflects once off the back of the droplet, and then refracts back out into the air. There is some dispersion, so the different colors refract at different angles. Red light is refracted less than other colors, so it appears higher in the sky.

In the right conditions you can see a double rainbow. The secondary rainbow is always there when the primary rainbow is present, but it's much dimmer. To form the secondary rainbow the light bounces twice inside the droplets - this reverses the order of the colors.