Correct Answer - Option 2 : 1000 m

^{3}
__Calculation:__

Let us assume x m^{3} quantity of earth are excavated

if excavations are done by manually then total cost of excavation = 80x...........(i)

If excavations are done by machine then total cost of excavation = 60000 + 20x..........(ii)

Then quantity of earth for which the cost of excavation by machine will be equal to the cost by manual excavation. so equate equation (i) and (ii)

80x = 60000 + 20x

60x = 60000

x = 1000 m^{3}