Answer:
B. A torso mannequin, which is cheaper and smaller, is sometimes used as an alternative to a full-sized one.
Step-by-step explanation:
Pronouns are used to replace nouns, usually to avoid repetition of the same word. The replaced noun is the antecedent to the pronoun replacing it.
Sometimes, in long sentences, or in sentences that have two or more nouns, it can be quite unclear to discover the pronoun's antecedent.
In this case, it's obvious that torso mannequin is smaller and, hence, cheaper then a full-sized one, which means that pronoun "it" referred to noun clause "torso mannequin".
Knowing this, it's easy to rewrite the sentence.