Final answer:
The 'earnings' data set in the provided SAS DATA step will contain 12 observations, each created through an iteration of a loop that runs 12 times. The output statement in the loop ensures that one observation is added to the data set per iteration, the correct option is C).
Step-by-step explanation:
The student has asked, "Based on this DATA step, how many observations will the earnings data set contain?" The code snippet inside this SAS DATA step shows a loop that iterates from 1 to 12.
Each iteration of the loop ends with an output statement, which writes the current observation to the data set.
Therefore, for each pass through the loop, one observation is written to the data set. Since the loop is designed to iterate 12 times, the earnings data set will contain 12 observations. The correct answer is option c. 12.