The answer should be A, inside the bag.
Permeable means allowing certain material to pass through. So if it's permeable to water and iodine, it means it can allow water and iodine to pass through the bag, but doesn't allow starch to go in.
Because iodine can pass through the bag, it can get into the bag filled with starch. But since starch couldn't diffuse out of the bag, the color change is only can be observed inside the bag. When no starch is gone out from the bag, there is no color reaction in the rest of the beaker.
So that answer is A.
it gives off protons because it's in a basic solution (pH>7)
True. Definition of gastric juice: a thin, clear, virtually colorless acidic fluid secreted by the stomach glands and active in promoting digestion.
