The correct option is
C My pleasure.
Here, we have to find the best response to the given question. 'Oh, my favourite ice cream!' explains to us that someone has brought ice cream for the speaker. Also, the speaker thanks the person for buying him an ice cream. Let's have a look at the options.
Option B - 'It's okay' is a short and a bit rude response to 'thank you'. Hence, option B is incorrect.
Option C - 'Don't mention it' is a polite way to say that thank you isn't needed. However, 'it was so cheap' is an unnecessary and a blunt response. Hence, option C is incorrect.
Option D - 'My children don't like it' is an inappropriate response to the given sentence. Even though the other person's children don't like it, he must first respond to the speaker's 'thank you'. Hence, option D is incorrect.
Option A - 'My pleasure' is an appropriate and a polite response to the given sentence. 'My pleasure' is a perfect response to 'thank you'. Hence, option A is correct.