what exactly is you doubt ?
A seems best out of all
the general structure of the sentence is subordinate clause starting with "because" +comma +main clause
paper is singular so we need "is"
also tense dictates the usage of "have tried"
usage of "to reduce" indicates "intention" as must be the case

Hey Aditya!
Why is B and C wrong?

Regards,
Mukherjee

C is wrong because of grammar
C says : Because paper of all kinds are the biggest single components in municipal trash, many municipalities have tried to recycle to reduce the cost of trash disposal---->"paper" is singular and "are" plural

B is wrong because of meaning issue
B says : Because paper of all kinds is the biggest single component in municipal trash, many municipalities tried to recycle so that the cost of trash disposal is reduced.

the subordinate clause is in simple tense so if we put the main clause in simple past then the sequencing of the events will get effected .the "trying thing" cannot happen prior to the fact that "paper of all kinds is the biggest single component in municipal trash".this thing is taken care of in A since A uses "present perfect"

also i somehow don't like the usage of "so that" in B --->i believe GMAC mostly uses "so X that" construction where "so" acts as intensifier ,for instance :it is so humid that ...blah blah ....(though i am little wary about this point)