The correct option is
C 20 cmWhenever a capillary tube is inserted in water, the water level rises in the tube due to capillary action.
This happens due to the pulling force applied by the top surface of the water in the tube.
When this force becomes equal to the gravity acting on the rised column, the water level gets fixed.
A freely falling elevator indicates that it is a non-inertial frame of reference.
It is a frame which moves with an acceleration.
In any non-inertial frame of reference, a ficticious force acts on the objects inside the frame, in a direction opposite to its acceleration.
This means that the effect of gravity is gone in the elevator.
Hence, in such a situation, the water level will keep on rising until it flows out of the tube.
Hence the water level will become as tall as the tube itself, that is 20cm.