Discredits and rejects are indeed similar, but here the distinguishing factor is actually not the difference between these words.
B, "discredits Concetta's evidence and then generalizes from new evidence", is wrong because although Alicia does discredit C's evidence, Alicia does not generalize from new evidence (Alicia doesn't present any new evidence at all).
C, "rejects Concetta's criterion and then disputes a specific claim" is correct because Alicia says a) grasping a social issue doesn't contribute to being a good writer (disputing the criterion of grasping social issue) and b) Franchot wasn't actually the first to understand the idea about industrialization (disputes a specific claim).
If you are still wondering about discredit vs reject, we could say that discredit generally means providing evidence to the contrary, while rejection is a firm statement "this is incorrect (to use this criterion or make this claim, etc)."
