Anytime you encounter a short Reading Comprehension problem based on logical reasoning, first identify the question task in order to then address it.

Here, we are asked to "reconcile the discrepancy", so first identify the discrepancy.

Roughly, we can determine that the discrepancy is that the population of Sunset City is primarily retirees, with very few young children, but that there are "many boutiques that specialize in selling clothing for infants and toddlers".

Now, always try to predict the answer for short logical reasoning problems based on the scenario.

Here, a relatively simple answer, that the retirees have grand- or great-grandchildren who do not live with them seems rather logical.

Finally, look to the choices to see if anything matches your prediction, eliminating any choices that are vague, introduce a new undiscussed variable that has no impact on the situation, or make the situation seem less likely.

A. The children's clothing boutiques in Sunset City purchase their clothing from wholesalers in Sunrise City, where there are many more families with small children.
Where the boutiques source their products has no clear impact on sales without additional information. Eliminate.
B. The few children who do live in Sunset City do not have particularly large wardrobes.
This makes the situation seem less likely and is a reversal. Eliminate.
C. The residents of Sunset City are known to spend more on health care than do residents of nearby cities.
Health care costs has no clear impact on children's boutique sales. Eliminate.
D. The residents of Sunset City are generally wealthy and are known to spend large amounts of money buying gifts for their grandchildren and great-grandchildren who live in other cities.
This matches the prediction. Keep.
E. Sunset City is not located on a major highway.
The impact of being located or not located on a major highway for children's boutique sales is unknown. Eliminate.

Select Choice D for matching the prediction.