The correct answer is C.
Laboratories of reform, also denominated laboratories of democracy, was an expression promoted in the US by Supreme Court Justice Louis Brandeis.
It refers, within the federal structure, to a level of state autonomy that enables state and local goverments to act as "laboratories". They can pass laws that will be tested at the local or state level. It can be regarded as a manner of applying the scientific method to democracy. The most prominent example would be the legalisation of marihuana in the state of Colorado, despite the fact that this substance is forbbiden at the federal level.
The legal basis for these laboratories of democracy is contained in the Tenth Amendment to the US Constitution, in the following provision: "all powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."