It involves counting in binary, which I'm pretty sure isn't in this syllabus, but basically:

000 = 0

001 = 1

010 = 2

011 = 3

100 = 4

and so on until it reaches the maximum value for 3 bits which is 111 = 7.

For this question it asks you to take a look at 2, 3 and 4 seconds and it samples it at each dotted point, which correlates to a number for height on the y axis. So you merely convert each value to binary and that's your answer.

At 2 seconds height is 2 so the first value is 010

At 3 seconds height is 4 so the second value is 100

And at 4 seconds height is one so the last value is 001

So the answer is B.

However I really wouldn't worry about it, I HIGHLY doubt that will be in the exam - nothing to do with sampling and converting to binary anyway. Could be questions on it in the MM topic if you do that.