Step 1: Write extension in terms of length and diameter.
From Young's modulus, the stretch is $\Delta l = \dfrac{Fl}{AY}$. The area of a round wire is $A = \dfrac{\pi d^2}{4}$, so \[ \Delta l = \frac{4Fl}{\pi d^2 Y} \]
Step 2: Keep only what changes.
Same material and same load mean $F$, $Y$, $\pi$ are fixed for both wires. So the stretch depends only on length over diameter squared: \[ \Delta l \propto \frac{l}{d^2} \]
Step 3: Build the ratio of the two wires.
\[ \frac{\Delta l_1}{\Delta l_2} = \frac{l_1}{l_2}\times\left(\frac{d_2}{d_1}\right)^2 \] Here $l_1:l_2 = 1:2$ and $d_1:d_2 = 2:1$, so $d_2/d_1 = 1/2$.
Step 4: Put the numbers in.
\[ \frac{\Delta l_1}{\Delta l_2} = \frac{1}{2}\times\left(\frac{1}{2}\right)^2 = \frac{1}{2}\times\frac{1}{4} = \frac{1}{8} \]
So the extensions are in the ratio $1:8$, which is option (B).
\[ \boxed{1:8} \]