The Dean's argument follows the logic that students choose to study physics because they want to pursue a career in basic research and since the funding for pure science research is decreasing, the number of postgraduate students studying physics is likely to decline.
Sentences C and E provide direct evidence to oppose the Dean's claim and hence are the right choices.
Sentence A talks about undergraduate students and hence is unrelated to the point of discussion. Similarly, sentence B talks about the number of undergraduate students studying Chemistry and hence is again is not related to the Dean's argument. If D is true, this means that there is an increase in interest in students to study Physics which counters the Dean's argument. However, it does not talk about the career motivations of students and hence does not weaken the Dean's argument seriously.