I originally put A as well, but I now realize that the answer is C. I hope the following explanation will help.
The question here asks us to explain why the threshold of economic viability has not decreased from $35, despite technological improvements in solar power equipment. The key to this question is to realize what the definition of economic viability is, as defined by the GMAT writers of this question. This specific definition can be found in the parenthesis in the question, the part where it says "(that is, the price per barrel to which oil would have to rise in order for new solar power plants to be more economical than new oil-fired power plants)" This is where the "threshold of economic viability" is defined. Reading this carefully, you will realize that the "price of oil" is a threshold that will not change unless the ratio of efficiencies of oil power equipment vs. solar power equipment increases or decreases. This is the ONLY thing that will change the threshold.
The question states that the efficiency of solar power equipment has increased. If the efficiency of oil power equipment has stayed the same, then the ratio of efficiencies of solar vs. oil power equipment should change. However, the anomaly the question is asking about is why the ratio has not changed. The ONLY way the ratio won't change despite the increased efficiency of solar power equipment is if the efficiency of oil power equipment increased by the same amount as the efficiency of solar power equipment. For those who think more in terms of math: If the solar power equipment efficiency was originally "100" and the oil power equipment efficiency was originally "200", then the ratio of "old solar : old oil" is 100:200, or 1/2. Now, the solar power equipment efficiency increased, so let's say its efficiency is now "200". If the oil power equipment efficiency remained the same as before, the ratio of "new solar : old oil" would now be 200:200, or 1, which is a change from the original old ratio of 1/2. The only way the ratio of new solar : old oil would remain at 1/2 is if oil power equipment's efficiency increased to "400" from its original 200, making the ratio of new solar : new oil equal to 200:400, or 1/2, which is the same as the old ratio. This clearly demonstrates that the answer is C. That's the only answer that discusses technological improvements in oil power equipments that make it more efficient .
The reason why Choice A is wrong is because the cost of oil has no effect on this $35 threshold. To understand this, I thought of the following two extreme scenarios:
1) Oil all of a sudden costs $1 million / barrel (or some other ridiculous amount of money), does this change the threshold? No. The threshold is still at $35. The fact that oil now costs $1 million / barrel means that the threshold of $35 is exceeded, which means it is now more efficient to use solar power equipment than oil power equipment. However, it doesn't mean the threshold of $35 has changed.
2) Oil all of a sudden becomes free. It costs $0. Does this effect the $35 threshold? No. The threshold is independent of the cost of oil. Even if oil is free, the threshold for solar power equipment to become more efficient than oil power equipment is still $35, because the efficiencies of the equipment do not depend on the price oil, they only depend on the technical abilities of the equipments. Now, you might say, doesn't that explain why the threshold of efficiency is unchanged? It does not. The reason why I showed two extreme scenarios is to show that the price of oil is IRRELEVANT to the threshold. If it CAN explain why the threshold of efficiency is unchanged, then one of the two extreme scenarios should change the threshold of $35. However, I have shown both extreme scenarios and neither of them effect the threshold of $35. Therefore, Choice (A) is irrelevant and is the wrong answer.