D) Same method ... applying the formula nCr*(p^r)*(q^(n-r))
When to apply Bernoulli's trials....
1) Only two possible outcomes for each trial (Yes or No, Heads or Tail, or simply p=Success & q= Failure. Note: p need not be same as q)
2) The probability of success (p) is same for each trial
3) Trials are independent (n is independent)
So in this problem, there are seven trials and you want to find the probability of success for exactly 4 of them.
For 1 trial Success is: p= 1/2 (its either Yes or No)
q = 1-p = 1/2
Applying BT, you get 35/128.
Added: I also found the following link on this website (see Appendix A) http://www.gmatclub.com/content/courses/quantitative/probability.php