This is done by factoring. 1/8 is smaller than 1/2, so we can factor a 1/8 out of 1/2. This is what that looks like:

, because factoring after all is a form of division. When we divide a fraction by a fraction, we bring the lower fraction up and flip it to multiply, giving us this:

. This of course reduces to 4. So when we factor out 1/8, what we will have then is

, choice D from above.