The question stem specifies that y is positive and asks for the value of y. Statement (2) is much less complex, so start with that statement.
(2) INSUFFICIENT: If y is an integer, it could be 1 or 2 or any other positive integer. There's no way to know the value of y definitively, so this statement is not sufficient to answer the question.
(1) INSUFFICIENT: The value of y2 is less than or equal to the value of y. Hmm. In most cases, when you square a value, it gets bigger. But there are a few narrow circumstances in which the value either decreases or stays the same. If you square the number 0, you get 0. If you square the number 1, you get 1. And if you square any value between 0 and 1, the resulting number actually decreases; for example the square of 0.5 is 0.25.
So this statement indicates that y is equal to 0, 1, or a value between 0 and 1. The question stem says that y must be greater than 0, but that still leaves all the values between 0 and 1, as well as 1 itself. There's no way to know the value of y definitively, so this statement is not sufficient to answer the question.
(1) AND (2) SUFFICIENT: The first statement significantly narrows the range of possible values for y: the number 1 or a value between 0 and 1. The second statement indicates that y must be an integer, so that knocks out all of the values between 0 and 1. The only value remaining is the integer 1.
The correct answer is (C): The two statements together are sufficient to answer the question, but neither statement is enough by itself.