For a species of large abalone shellfish to develop from a species of

For a species of large abalone shellfish to develop from a species of smaller ones, they must spend less energy on finding food and avoiding predators, and more on competition in mating. So it is surprising that the fossil record shows that a species of large abalones developed from a smaller one only after otters, which prey on abalones, began to dominate the waters in which the abalones lived.

large species developed from small species -> less energy on food/avoiding predators AND more competition in mating
Type-paradox

(A) Otters and abalones also compete for the same types of food and so are drawn to the same waters.- incorrect; this deepens the paradox

(B) The fossils that were studied showed the development of only one of the two species of large abalones known to exist.- Irrelevant

(C) Otters also prey on the abalones' competitors for food and so indirectly make it easier for abalones to get food.- Correct; It tells you that otters mean less competition for food, which would help explain why otters led to the development of a larger species of abalone from a smaller species.

(D) Small abalone species tend to reproduce more rapidly than larger abalone species.- incorrect; "More rapidly" doesn't guarantee it's fast enough to develop. The stimulus talks about small abalones developing into large ones, so their relative mating speed doesn't explain how that process happens even in the presence of a predator

(E) Otters have a preference for large abalones over small ones and so prefer waters in which large abalones are found- Out of scope; The fossil record shows that otters moved in before the development of the large abalone. Their preferences don't explain how that resulted in the small ones getting big.

Answer C