Final answer:
A story from popular culture passed down orally is known as a folk tale, which is centered around everyday life and cultural values, differentiated from myths that explain larger concepts and from epics which detail heroic deeds.
Step-by-step explanation:
A story originating in popular (peasant) culture that is typically passed along by word of mouth is known as a folk tale. Folk tales are narratives passed down from generation to generation through oral tradition. They may contain elements of magic or fantasy, often involving characters such as fairy tale creatures, and serve to entertain, educate, and preserve a culture's customs and values. Unlike a myth, which usually seeks to explain the natural world, religious beliefs, or social customs with larger-than-life tales, and an epic, which is a long narrative poem about heroic deeds, folk tales are more focused on everyday life and often lack the sweeping scope of epics or the direct religious or existential explanations found in myths.
The term saga can be used to describe a long, involved story or a series of interconnected stories or events, but it is more specifically associated with the historical or biographical prose narratives of the Norse Vikings. Therefore, the correct answer to the student's question is b) Folk tale.