The Reader-Response theory of literary criticism contends

The Reader-Response theory of literary criticism contends that as a person reads, their life experience unconsciously influences understanding of the text, and therefore, teaching specific authorial intentions will limit a reader's exploration and enjoyment of a text.

A- The Reader-Response theory of literary criticism contends that as a person reads, their life experience unconsciously influences understanding of the text, and therefore, teaching specific authorial intentions will limit a reader's exploration and enjoyment of a text.
Should be his or her instead of their

B- The Reader-Response theory of literary criticism contends that as people read, their life experience unconsciously influences understanding of the text, and therefore, teaching specific authorial intentions will limit a reader's exploration and enjoyment of a text.
Correct

C- The Reader-Response theory of literary criticism is the contention that when a person reads, his or her life experience unconsciously influences understanding of the text, and therefore, teaching specific authorial intentions will limit a reader's exploration and enjoyment of a text.
When is used to refer to a specific moment but this is not the intended meaning of the original sentence

D- The Reader-Response theory of literary criticism is the contention that when people read, they life experience unconsciously influences understanding of the text, and therefore, teaching specific authorial intentions will limit a reader's exploration and enjoyment of a text.
Same error in C + Should be their instead of They

E- The Reader-Response theory of literary criticism is the contention that as people read, their life experience unconsciously influences understanding of the text, and therefore, teaching specific authorial intentions will limit a reader's exploration and enjoyment of a text.
Grammar OK but It's too wordy and B is more than better than this choice so eliminate it .. ( Always prefer verb over a noun phrase ( contends that vs the contention that )