Here, input “0” is considered as $I_0$ and input “1” is considered as $I_1$ and output Q is considered as Y for the given MUX.
As we can see in the given figure that $I_0 = Y,$ $I_0$ is storing the previous state of output $Y.$
Now, the basic function of $D$ Latch is:
$1)$ When Enable(E) = $0,$ Output state has the same its previous state, we call it as Memory State or you can say informally as $Q_{n+1} = Q_n$
$2)$ When Enable(E) = $1,$ Output variable = Input variable
Now, here, make the setting as:
Input: $I_1$ and Enable(E)= $S$
Now, As we have already seen that $I_0$ is storing the previous state of output. So, Say, previous state of output is $Y_{old}$ and Next state of output is $Y_{new}$
Now, According to the equation of $2 \times 1$ MUX i.e. $Y= \overline{S}I_0 + S I_1$
Since, $I_0 =Y_{old}$
Hence, we have
$Y_{new} = \overline{S}Y_{old} + S I_1$
Now,
$1)$ Make Enable(E)= $S = 0$, we get,
$Y_{new} = Y_{old}$ (i.e. Memory State for the D Latch)
$2)$ Make Enable(E)= $S = 1$, we get,
$Y_{new} = I_1 $ (i.e. output = input)
Hence, given circuit is equivalent to $D$ Latch.
Therefore, $\textbf{(B)}$