Here's how I solved it:

Given, price of the diamond decreases as the square of impurities increase.

\(Diamond_{0.0004%}\) = 2500

So, obviously if the impurities increase, the price MUST be less than 2500. So, rule out option D and E

Now, how much of 0.0004 is 0.0025 [I have squared both the impurities as per the given info]? That will be 6.25. In other words, if you multiplied 0.0004 by 6.25, you will get 0.0025.

Since, the price and impurities and inversely proportional - I will divide the price by 6.25

\(Diamond_{0.0025%}\) = \(\frac{2500}{6.25}\), which is 400. Hope what I did was correct