Can "that" modify persons/people?

[DavinG757]

Example: A person that reads does well on exams.

Would this be enough to disregard an answer choice?

[RonPurewal]

in formal writing this is absolutely wrong; that function is served by "who(m)".

... and as long as we're on the topic, "which" can't stand for people either.

in informal usage you'll see these quite a bit, but informal writing isn't (and can't be) tested on this exam.