The correct answer is B. Only II is implicit.
The statement only says that the school authority decided to open a summer school in the school compound for the students in the age range of 7 – 14 years. It does not say anything about whether all the students will attend the summer school or not. It also does not say anything about the parents’ preferences or financial situation. Therefore, only assumption II is implicit. Assumption II is implicit because if the parents prefer to remain in the city than going out of town, then they will send their children to the summer school which is located in the school compound. Assumptions I and III are not implicit because the statement does not say anything about whether all the students will attend the summer school or not, and it also does not say anything about the parents’ financial situation.