**CONCEPT: **The question is based on basics of Percentage

**SOLUTION: **

The Marked Price(M.P) and tax in total is 20$

9% is taxed on the MP.

Separating MP and Tax we have

MP= 20/1.09= 18.35 (approx),

Thus the amount of tax paid= 20-18.35=1.65$(approx)

Based on the values of marked price and tax we have just calculated, only I and II remain valid.

III is invalid because sales tax is more than 1.50$.

Thus, I and II both are correct. Hence Option (C)