The type of written response that would best answer the question is the second one: a fictional, creative writing story about neighbors and their relationships.
Although the excerpt is referring to "A Quilt of a Country", it is not necessary to write an expository response developing the setting, point of view and conflict of this text. The passage from "A Quilty of a Country" is functioning rather as an example of how should a text that includes people from different backgrounds look like. Actually, the prompt is asking the students to write an introduction for a story of their own based on the same theme: people from different backgrounds that live side by side. That is the reason why the best response would be a fictional, creative writing story.