The best practice to identify the cause of increased response time in a serverless environment is to use tracing tools that provide detailed insights into all the components of your application. AWS X-Ray is designed for this purpose. By instrumenting the Lambda function with the AWS X-Ray SDK and adding HTTP/HTTPS interceptors and SDK client handlers, you can get a comprehensive view of the interactions and latencies within your application. The X-Ray service map will help you visually pinpoint the source of performance issues by showing average response times for each segment of the system. Thus, option B is the correct answer.