The second paragraph functions primarily to describe the appearance of a central character, since most of it is about the way Peggy is dressed, as seen below.
What is the purpose of the paragraph?
The paragraph we are analyzing here is the second one, ranging from line 4 to line 7. After reading it, we can see that it mostly address the way Peggy looks, that is, her appearance. The author uses about half of the paragraph to describe the outfit Peggy wears when she paints.
The purpose is to develop her character. Apparently, when she dresses that way, Peggy's inspiration changes. However, even though her mother is briefly mentioned, Peggy is the only character so far. We do not see an important conflict just yet, and the paragraph does not support any theories.
With that in mind, we can conclude that the first option is the best answer. The paragraph functions primarily to describe the appearance of a central character.
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