The question is:
Is there a natural $n$ and $A\in M_{n}(\mathbb C)$ (complex $n\times n$ matrices) such that the conditions
\begin{align} \operatorname{rank}(\,A\,) &= 10\\ \operatorname{rank}(A^2) &= 7\\ \operatorname{rank}(A^3) &= 2 \end{align}
are satisfied? Either provide an example or prove it does not exist.
It's clear that $10\le n$ and because $A$ is not invertible it means $11\le n$. I've tried finding an example using Jordan Blocks: there are two block with the size of $4$ or one block with the size of $5$, in order to answer on the third term. Then I tried filling the matrix with block of 3 but it doesn't work out. I also don't have any idea how to prove such a matrix doesn't exist.
Your idea to use Jordan normal form is a good one. Note that the only way that the rank of your matrix can decrease as you take successive powers is if the matrix contains nilpotent Jordan blocks (corresponding to eigenvectors/generalized eigenvectors with eigenvalue $0$). Call the nilpotent Jordan blocks $N_1,\dots,N_k$. Without loss of generality we may assume that no Jordan block with eigenvalue $0$ is a $1\times 1$ block, as if this is the case then we may restrict ourselves to the nonzero Jordan blocks by disregarding the extraneous blocks. Note that as the rank of $A$ is $10$, by examining the structure of $N_i$ we may see that the rank of $A^2$ is $10-k$; thus we must have exactly $3$ nilpotent Jordan blocks. But now it is easy to see that in general, rank$(A^m)\geq$ rank$(A)-(m-1)k$, so as $k=3$ we must have rank$(A^3)\geq 10-2\cdot3=4$. In particular, no such $A$ can exist.