In this case, the ethanol is treated by concentrated sulphuric acid (H2SO4) to form diethyl ether. The acid in an aqueous medium produces hydronium H3O+ ion.
H+ protonate the oxygen atom of ethanol and the ethanol molecule gets a positively charged oxygen. After that, the oxygen atom of unprotonated ethanol abstracts a H2O molecule from ethanol and produces diethyl ether.
CH3CH2OH+H2SO4140oC−−−→CH3CH2OH+2+H2O
CH3CH2OH+2+CH3CH2OH→CH3CH2OCH2CH3+H2O+H+
So, the correct option is C