The refractive index in air and the refractive index in vacuum
is almost the same (the ratio of the two is something like 1.003,
if I'm not mistaken).
However, when you are trying to define the refractive index of
any medium, you usually use the speed of light in a vacuum as the
standard by which it can be compared against.
If (D) had not been one of the choices, then (A) would have been
the answer. However, since (D) is the more appropriate answer, that
is the answer he should have chosen.
At the end of the day, it is all about choosing the most
appropriate answer. This student got his concepts mixed
up, and deservedly lost his mark.