I believe pranav is right. Before each test method executes, Salesforce automatically clones the data created by the @testSetup method, ensuring a clean, independent copy for every test.

None of the answers is correct as once a phone number is inserted in a test setup, no method could change them for other methods.
It should be 333-878 and 333-878

I echo Sarah's comment. With the given code, the answer should be C. C could be the right answer if the code is rectified.

I think the right answer is C. if it was B the code should be
testAccts.add(new Account(Name = ‘MyTestAccount’+i, Phone=’333-878’+i));