Final answer:
A red blood cell that shrinks indicates it is in a hypertonic solution, with a higher concentration of salt outside the cell than inside.
Step-by-step explanation:
When a red blood cell loses water and shrinks in size, this suggests that it is in a hypertonic solution, where there is a higher concentration of solutes outside the cell than inside. This causes water to move out of the cell, leading to cell shrinkage or crenation. The correct answer to the question would be (a) Outside of the cell, as the higher salt concentration in the hypertonic solution compares with the red blood cell's interior.