Philosopher: Graham argues that since a person is truly happy only

Statement : Graham argues that since a person is truly happy only when doing something, the best life is a life that is full of activity.
Counter Statement : But we should not be persuaded by Graham’s argument. People sleep, and at least sometimes when sleeping, they are truly happy, even though they are not doing anything.

The role played by 2nd statement is negating the first. it don't support the first statement, so we can eliminate A, D and E since they are pointing out the statements in same direction.

(A) It is a premise of Graham’s argument. (supporting 1st statement, which is false)(INCORRECT)

(B) It is an example intended to show that a premise of Graham’s argument is false. (Yes, the Philosopher is trying to prove that sleeping can also be a cause of happiness, activity is not the only cause)(CORRECT)

(C) It is an analogy appealed to by Graham but that the philosopher rejects. (why will the philosopher will reject its own claim when its negating the Graham's statement)(Illogical)

(D) It is an example intended to disprove the conclusion of Graham’s argument. (Graham's conclusion states that one's life should be full of activity, which philosopher is not negating but the fact that only activity can provide happiness is been negated, which is premise not conclusion)(INCORRECT)

(E) It is the main conclusion of the philosopher’s argument. (Main conclusion is based on premise, but both statements are opposites)(INCOREECT)

Answer is B