ANSWER: This is a MISUNDERSTANDING. Joe may feel that Mr. Carlson is playing favorites, but in this case he's not. Mr. Carlson knows that Joe is an excellent student, and that he could have done better on his book report. He could tell that Joe didn't put a whole lot of effort into the project, and his comment was meant to remind Joe that even students as smart as he is are expected to work hard.
Dan, on the other hand, has always struggled with his reading, and while he chose to read a book that was easier than Joe's, he really tried his best on the report. It was clear that Dan worked hard to improve his grade, and Mr. Carlson wanted to show him the appreciation he deserves for a good effort.