Explanation: The setting of a story is the time and place where the story is developed. It also can be the description of the general atmosphere in the story. In the given passage we can see that the author is describing the setting with phrases like "The sun beat down on the pavement, causing a mirage on the road ahead" which describes some characteristics of the place (including the weather) and "Francis looked at his watch. It was noon" which describes the time.
I would say that A is correct because if foreign born children were placed with younger children that were born in the country they thought they were equal intelligent to younger children.