To add an image to a quiz question you will need to use an image that is in PNG or JPEG format. You can upload and use any image (in either PNG or JPEG) from your computer. You could also create a PNG or JPEG formatted image by taking a screenshot on your computer (using Cmd+Shift+4 to crop a screenshot on a Mac, or the Snipping Tool on PC) of whatever you need to insert as an image. Then in the quiz question text box click on the option in the text editor to insert an image (pointed out in red below).
Then click on "Browse repositories" on the subsequent pop-up window.
Then click on "Upload a file" on the left side and then on "Choose File" in the center of the pop-up window.
Locate the file in your computer's directory and select it. With the file selected then click on "Upload this file" in the pop-up window.
You will then need give a description after which you can then click on "Save image".
As a best practice, it always best to preview your question from the student perspective to make sure it appears as intended.