Bay to Breakers, ....., is a marathon race held annually in San Francisco.
a. it's runners wear hilarious costumes
b. the runners of which wear hilarious costumes
c which its wear hilarious costumes
which answer is the suitable one?
It has a relative (of which) that relates it to Bay to Breakers.
a. "its runners wear hilarious costumes" is a complete sentence, but it has no relative to mark it as an adjective clause related to Bay to Breakers. [It should have the possessive its rather than it's meaning It is.]
c. "which its wear hilarious costumes" doesn't make sense by itself. If it is changed to "which wear hilarious costumes", it makes sense, but would say that Bay to Breakers wears costumes. Bay to Breakers is a race and doesn't wear costumes. The runners who participate do.
The good news is, you're right: B is the correct answer.
C is clearly not correct, because it's just a meaningless jumble of words. So we have to look at A and B.
A is so close to being okay. What's important to note is that the apostrophe is wrong. We don't want "it is runners wear," but "the runners of it wear." So "it's" is incorrect and "its" is better. However, even if the word were "its" the sentence would be wrong, because "its runners wear hilarious costumes" would be an independent clause. The sentence would then have two independent clauses smushed together, making it a run-on.
B is the only correct option. B represents a properly-formulated subordinate clause, and as such is the only thing that can fit into the original sentence.
* As I said, A could almost be correct if it weren't a run-on. Basically, this could be solved by using dashes to represent the break between the two independent clauses:
The Bay to Breakers - its runners wear hilarious costumes - is a marathon race...
The Bay to Breakers - some call it the straight pride parade - is a marathon race...