I think there are several ways of reading the question:
1) The developer is making an application for the client. In which case 'changing environment' would mean that the objectives are not clear and RAD (D) would be the answer.
2) The developer is writing an application that the client can use for end user development, like a DBMS. In which case they would have to use the structured approach to make sure that the application is complete and bug free. But this is unlikely as the question says "small businesses", which would imply they don't have the money and time for the structured approach.
3) The client is using a (eg) DBMS app to create an application, so they would be using end user.
Now...to get really really picky:
"What is an appropriate software development approach they
Now being that picky, the plural is used only with businesses. This would mean that the "they" in the second sentence is referring to the clients and thus asking what approach the clients are taking. It would mean that the clients are writing their own application and thus be using end user.