Discussion
Consider the reaction sequence shown below:

TsCl = p-toluenesulfonyl chloride
The product is
Answer: D
The product is the ring-contracted and ring-expanded ketone, a cyclopentane fused to a cycloheptanone (D).
t-BuOK deprotonates the tertiary OH. The resulting alkoxide pushes a bond on its own carbon across to the neighbouring carbon, which loses tosylate: a semipinacol (pinacol-type) rearrangement. The bond that migrates is the one anti-periplanar to the C-OTs bond. With the tosylate equatorial on the trans-decalin, that is the ring-fusion C-C bond.
When the ring-fusion bond shifts, the ring that held the tosylate loses a member and becomes a cyclopentane, the other ring gains one and becomes a seven-membered ring, and the alkoxide carbon becomes the C=O: a hydroazulenone, structure D.
An epoxide (A) would need the alkoxide to attack from the back of the C-OTs bond, which the cis arrangement prevents. B and C are not products of a base-promoted reaction of this hydroxy tosylate; the anti-periplanar migration outcompetes elimination.
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