It seems like Tasha's thoughts come from the pre industrial era
Industrial cities began to develop because of new technologies and ideas and in order for the factories to grow larger, they needed more workers so the the unemployed people had those opportunities to work there.
The correct answer is was working.
You need to use past continuous tense (was working) to denote that an action which was being processed for a period of time has now been interrupted. So, Penelope was working on her homework for a prolonged period of time, and then the doorbell rang and interrupted her.