The angular resolution of telescope is roughly given by formula:

Where:
λ = wevelength of light
D = diameter of a telescope
First step in solving this question is to convert diameter given in inches into meters:
Telescope A:
6 * 0.0254 = 0.1524m
Telescope B:
10 * 0.0254 = 0.254m
Wavelength of visible light varies from 390nm to 700nm. We will take 500nm as a number for our calculation.
Telescope A:

Telescope B:

The results are given in radians. We need to transform this into degrees.
Telescope A:

Telescope B:

To find out which telescope can distinguish two stars we must convert given angle.
0.7'' is 0.7 arc seconds or 0.7 / 60 / 60 =0.0001944444444444 degrees
Telescope that has angles smaller than this can distinguish. In our case both telescopes have smaller angle and both can distinguish.