In class B network the first 16 bits will be the network id and the rest of the bits will be for the host ids.
In subnetting the host id is further borrowed.for 500 subnets to be possible at least 9 bits should be borrowed from the host id part.when 9 bits are borrowed from the host id atmost 510 subnets will be possible.
From the rest of the 7 bits 126 hosts will be possible for each subnet.
Therefore option (b) is correct