Explanation:

- The initial solution contains milk and water in a 7:3 ratio. Let's say the total volume is X liters.

- This means the milk volume is \( \frac{7}{10}X \) and water is \( \frac{3}{10}X \).

- After adding 50 liters of milk, the milk volume becomes \( \frac{7}{10}X + 50 \).

- The total volume now is \( X + 50 \).

- The milk accounts for 80% of this new total. Therefore, \((\frac{7}{10}X + 50) = \frac{8}{10}(X + 50)\).

- Solving the equation gives \( \frac{7}{10}X + 50 = \frac{8}{10}X + 40 \).

- Rearranging: \( 50 - 40 = \frac{8}{10}X - \frac{7}{10}X \).

- \( 10 = \frac{1}{10}X \).

- Therefore, \( X = 100 \).

- Initially, milk was \( \frac{7}{10} \times 100 = 70 \) liters, and water was \( \frac{3}{10} \times 100 = 30 \) liters.

- The difference between milk and water initially is 70 - 30 = 40 liters.

- Option 3, 40 liters, is correct.