Method 1:-
This method we can do in exam by taking small example .
$S=\left \{ 1,2,3 \right \}$ is a set of $3$ element . So $n=3$ .
Now, non empty subsets of S are,
$\left \{ 1 \right \}$,$\left \{ 2 \right \}$,$\left \{ 3 \right \}$,$\left \{ 1,2 \right \}$,$\left \{ 1,3 \right \}$,$\left \{ 2,3 \right \}$,$\left \{ 1,2,3 \right \}$
Now we have to choose n=3 distinct subsets such that $X_{1}\subseteq X_{2}\subseteq X_{3}$ .
Possible choices are :-
$\left \{ 1 \right \}\subseteq \left \{ 1,2 \right \}\subseteq \left \{ 1,2,3 \right \}$
$\left \{ 1 \right \}\subseteq \left \{ 1,3 \right \}\subseteq \left \{ 1,2,3 \right \}$
$\left \{ 2 \right \}\subseteq \left \{ 2,3 \right \}\subseteq \left \{ 1,2,3 \right \}$
$\left \{ 2 \right \}\subseteq \left \{ 1,2 \right \}\subseteq \left \{ 1,2,3 \right \}$
$\left \{ 3 \right \}\subseteq \left \{ 1,3 \right \}\subseteq \left \{ 1,2,3 \right \}$
$\left \{ 3 \right \}\subseteq \left \{ 2,3 \right \}\subseteq \left \{ 1,2,3 \right \}$
So total 6 possible ways are there for $n=3$.
Now if put n=3 is option only Option C gives $6$ answer.
So Correct answer is $n!$
This approach we can employ in exam .
Method 2:-
Let $S=\left \{ a_{1},a_{2},a_{3},....,a_{n} \right \}$
Here we have to select $n$ distinct non empty subsets of S such that $X_{1}\subseteq X_{2}\subseteq X_{3}\subseteq .......\subseteq X_{n}$
Now as $n$ subsets we choose are distinct and has to maintain the given condition, The cardinality of $|X_{i}|=i$ for all $i$ from 1 to n.
So $X_{1}$ has only one element in it.
just take $X_{1}$=$\left \{ a_{1} \right \}$
Now for $X_{2}$ has to be a set with 2 element in it one of the element should $a_{1}$ as it needs to be a superset of $X_{1}$.
$X_{2}=\left \{ a_{1},?\right \}$
How many choices we have for $“?”$ ?
= Here we have $n-1$ choices to fill $“?”$ .
Now similarly $X_{3}$ have $3$ elements in it.
Say $X_{2}=\left \{ a_{1},a_{3}\right \}$ .Now $X_{3}$ has to be a superset of $X_{2}$ .
$X_{3}=\left \{ a_{1},a_{3},?\right \}$
How many choices we have for $“?”$ ?
=> Here we have $n-2$ choices to fill $“?”$ .
Now going in the similar way How many choice we have $X_{n}$ ?
=> $X_{n}$ always has to be the base set S which is of size $n$ . So we have $1$ choice for that.
So , by Choosing $X_{1}$=$\left \{ a_{1} \right \}$ we have total $(n-1)*(n-2)*(n-3)*....*2*1=(n-1)!$ ways to satisfy the given condition.
Now For $X_{1}$ we have $n$ choices as $\left \{ a_{1} \right \}$,$\left \{ a_{2} \right \}$,$\left \{ a_{3} \right \}$,….$\left \{ a_{n} \right \}$.
So total number of ways are =$n*(n-1)!=n!$
Correct answer is (C) .