Concept: The question tests on the reasoning associated with Mean and Median as measures of Central Tendency.

Solution:

With 3 prices, the median would be the (3+1)/2 th = 2nd term when the prices are arranged in ascending/descending order.

Let us assume the three prices to be x, y, z.

Hence given, (x +y + z)/3 = 120

Let’s assume x, y, z as prices (of the three people) 

[We are NOT assuming x,y,z to be prices of purchase of Tom, Jane, Sue respectively They are in any unspecified order with x<=y<=z ]

St (1) The price of Tom’s house was $110,000

One of the prices is 110,000$ and this is less than the Mean of 120,000$.

Hence it can be the first or the second value. Thus Insufficient to conclude that it is exactly the second value and hence the Median.(Insufficient)

St(2) One of the prices is 120,000$ and this is equal to the average. It must be the second  price “y”, as it's not possible for this price to be the first(lowest)”x” or third(highest)”z” as it represents the average.

Thus, it is sufficient to provide us the information that it is the second value or the MEDIAN.

Thus sufficient. Hence Option (B)