C — (i) and (ii)
When magnesium ribbon is burnt in air, it burns with a dazzling white flame and forms a white powder (magnesium oxide). Magnesium does not vapourise, and MgO dissolved in water gives a basic solution (turns red litmus blue, not blue litmus red).
Observation (i) is directly stated in Activity 1.1: "magnesium ribbon burns with a dazzling white flame." Observation (ii) is also confirmed: "changes into a white powder" (MgO). Option (iii) is wrong — magnesium burns, it does not simply vapourise. Option (iv) is wrong — MgO is a basic oxide; its aqueous solution turns red litmus blue, not blue litmus red. Examiners expect students to eliminate incorrect observations using their knowledge of the nature of MgO.