Concept:The phrase “living in a fool’s paradise” refers to a false sense of happiness based on mistaken beliefs.Explanation:People who think all is well in Cascada believe their present good situation will continue.In reality, this belief is not true, and their happiness is built on an illusion.Such persons are unaware that their situation may soon become worse.Therefore, they are not simply fools or insane, but are under a false impression.Answer:Option C — they are under an illusion.