The correct path is indeed System Policy > Rules > Data Lookup Definitions. This is where you can locate and update the Priority Problem Lookup record based on Impact and Urgency.
From the book:
Priority values based on Impact and Urgency may be updated in the Priority Data Lookups table. No scripting is required to calculate values. To update how and when lookup occurs, see System Policy > Rules > Data Lookup Definitions and open the Priority Problem Lookup record.
C is correct.
System Policy > Rules > Data lookup Definitions.
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