Gotham City has just introduced a legal requirement that

Hi Dhairya275

I'm happy to help.

This question id difficult because it’s hard to connect ideas in the stimulus.

ANALYZE THE STIMULUS:

Fact: Legal requirement that the number of tenants living in an apartment not exceed 3 persons.
Fact: Recession occurs and average incomes fall, the number of apartments putting up walls to make room for converted shared rooms goes up.
Fact: Converted shared apartments reduce rent paid by each tenant.
Conclusion: Finding apartment accommodations in Gotham City will not be made more difficult by a recession.

We have two things in mind:
(1) Supply: the number of apartments putting up walls increases.
(2) Demand: the number of tenants want to rent shared rooms also increases.
Conclusion: It’s not difficult to find a shared room.
Assumption: Supply is always greater than demand. If NOT, it will be difficult to find a shared room. Let attack this point.

ANALYZE EACH ANSWER:
Which of the following would be most important to determine in order to evaluate the argument?

(A) Whether in Gotham there are any apartments that charge leaseholders additional rent for each additional tenant in an apartment
Wrong. Even though there is additional charge, it’s still NOT difficult to FIND a shared room if the additional charge is not too much high).

(B) Whether the number of apartment hunters increases significantly during economic recessions
Correct. We need the relationship between demand and supply. If we don’t have that info, it’s hard to say finding a shared room is not difficult. B correctly states the that. Thus, B attacks the main point and is correct.

(C) What the current limit for number of tenants in an apartment in Gotham is
Wrong. Because there is nothing indicating the change of limit for number of tenants in an apartment in Gotham. We should assume that the current limit is 3. Thus, C does not help anything.

(D) What proportion of city tenants currently live in apartments that already have an extra wall that converts a large living room into an extra converted shared room
Wrong. TEMPTING but wrong. We only know the proportion of tenants who live in apartments putting up with walls. But we do NOT know this proportion is HIGH or LOW. We can’t say anything about the relationship between demand and supply.

(E) Whether in the past a number of apartments in Gotham have had tenant-apartment ratios well in excess of the new limit
Wrong. We are talking about the current situation, not the past. Thus, E does not help.

Hope it helps.