IAS is a measurement of air pressure created by the moving air flow (Total - Static = dynamic). If a certain IAS is the same at altitude as it was at sea level then the TAS will be higher. The IAS being constant indicates that the same amount of air molecules is passing over the airframe as it was at sea level. Yes, the air density is reduced at altitude, but this is compensated by travelling at an increased TAS to maintain the constant IAS (and therefore - constant amount of air molecules).
However, for a given throttle setting/position the engine will not be giving the same amount of power at altitude as it was at sea level. (due to the decreased air density). Therefore the throttle would have to be advanced to overcome this, but the thrust required remains constant as the air resistance (drag) is also constant (same amount of air molecules) due to the increased TAS needed to maintain the constant IAS. I'd go with 'C'.