Giving the entire $2500 back to Osteen means that Osteen gets Johnson's services in regard to the first record for free.
Awarding $1750 assumes that the value of Johnson's services in producing and promoting the first record was exactly half of the contract price. This may not be true.
Suppose it cost Johnson considerable time, money, effort to set up the studio to make Osteen's first record and that, once the setup was in place, it could be used without change to make the second record; then, the second record would cost less to make than the first.
This is why (b) is the best answer: the benefit conferred is $2500 minus the value of Johnson's services in producing and promoting the first record.