Frijda’s law asserts that how much you perceive something as real is the only thing that determines emotional response, so this suggests that we shouldn't feel emotion if we know that somethings aren't real.
Let's get into the answer choices.
A) The passage is rather questioning F’s argument on why people still feel certain emotion EVEN IF they know some things are not real. Which means that they still do feel emotion on illusionary things. It's rather close to saying "NOT unpredictable."
B) The author does not cover the case of not being able to distinguish illusion from reality. He/she only covers "mistakenly" thinking something as real with coiled garden hose example. So, we don't know whether the emotional response would be weaker or stronger.
C) How people perceive something as real is the only thing that matters according to F’s law. So, the more you think it is real, the more intense emotional response you would experience. Correct
D) Nothing about feeling more intense emotion has been mentioned in specific case of "fear" with comparison to other emotions. "Fear" was just an illustration to explain the point.
E) We aren’t talking about only “fear” as emotional response.