Complete step-by-step solution:
We are asked to find the number of times 5 appears from 1 to 1000.
Now, in 1000 there are no 5 digits so 5 appears in one digit, two digits, and three digits numbers.
We are going to find the number of times 5 appears from 1 to 1000 by taking three cases. In the first case, 5 appears once, in the second case 5 appears twice and in the third case, 5 appears thrice and then adds all the three cases.
Case 1: When the digit 5 appears once.
_ _ _
In the three places above, first of all we are going to choose one place where 5 appears. The ways to select one position out of these three places is:
${}^{3}{{C}_{1}}$
Now, in the remaining 2 places, any 9 digits from 0 to 9 except 5 will appear so multiplying 9 by 9 and hence multiplying ${{9}^{2}}$ to above expression we get,
${}^{3}{{C}_{1}}{{\left( 9 \right)}^{2}}$
We know that, ${}^{n}{{C}_{1}}=n$. Using this relation in the above expression we get,
$\begin{align}
& 3\left( 81 \right) \\
& =243 \\
\end{align}$
Case 2: When the digit 5 appears twice.
_ _ _
Now, the digits are appearing twice so we have to choose two places out of three places and the ways to select two places out of 3 are as follows:
${}^{3}{{C}_{2}}$
We know that, ${}^{n}{{C}_{r}}={}^{n}{{C}_{n-r}}$ using this relation in the above expression we get,
${}^{3}{{C}_{3-2}}={}^{3}{{C}_{1}}$
The above expression is reduced to 3.
Now we know that if in a number 5 appears twice then we have to multiply numbers by 2.
After the two places are occupied by 5 we are remaining with just one position so any of the 9 digits can be placed in that blank so multiplying 9 by 3 we get,
$\begin{align}
& 9\times 3 \times 2\\
& =54 \\
\end{align}$
Case3: When the digit 5 appears thrice.
Now we know that if in a number 5 appears thrice then we have to multiply numbers by 3.
There is only one possibility when 5 appears thrice is:
$555$
So the number will be $ 3 \times 1$.
Now, adding the result of cases 1, 2 and 3 we get,
$\begin{align}
& 243+54+3 \\
& =300 \\
\end{align}$
Hence, the digit 5 appears 300 times from 1 to 1000.
Hence, the correct option is (c).
Note: You might think that we can count the digit 5 by first looking from 1 to 9, how many times 5 appear then from 10 to 99 how many times 5 appear then from 100 to 999 how many times digit 5 will appear. You can do it but it will consume a lot of time and you cannot afford that much time in the examination so it is better to do the problem in the way that we have solved above.