Step 1: Concept
Intensity $I = I_0 \cos^2(\phi/2)$, where phase difference $\phi = (2\pi/\lambda) \Delta x$.
Step 2: Analysis
For path difference $\lambda$, $\phi = 2\pi$, so $I = I_0 \cos^2(\pi) = I_0$. Thus $I_0 = I$.
For path difference $\lambda/4$, $\phi = (2\pi/\lambda) \cdot (\lambda/4) = \pi/2$.
Intensity $I' = I \cos^2(\pi/4) = I \cdot (1/\sqrt{2})^2 = I/2$.
Step 3: Conclusion
The intensity becomes $I/2$.
Final Answer: (B)