The correct option is (b) 40320
The best I can explain: Now the first student is eligible to receive any of the 8 available prizes (so 8 ways), the second student will receive a prize from rest 7 available prizes (so 7 ways), the third student will receive his prize from the rest 6 prizes available(so 6 ways) and so on. So total ways would be 8! = 8*7*6*5*4*3*2*1 = 40320. Hence, the 7 prizes can be distributed in 40320 ways.