**Core Concept**
The question tests the understanding of oxygen transport in the blood, specifically the percentage of oxygen carried in chemical combination with hemoglobin. This concept is crucial in physiology and is relevant to understanding various respiratory and cardiovascular conditions. Oxygen binding to hemoglobin is a critical aspect of oxygen transport.

**Why the Correct Answer is Right**
The correct answer is based on the fact that a significant portion of oxygen in the blood is carried bound to hemoglobin in red blood cells. Hemoglobin has a high affinity for oxygen, allowing it to effectively pick up oxygen in the lungs and release it in tissues. The majority of oxygen, approximately 98.5%, is indeed carried in chemical combination with hemoglobin, while a small percentage is dissolved in plasma.

**Why Each Wrong Option is Incorrect**
**Option A:** This option is incorrect because it underestimates the amount of oxygen carried by hemoglobin.
**Option B:** This option overestimates the amount, as not all oxygen is carried in chemical combination.
**Option D:** This option also underestimates the amount of oxygen carried by hemoglobin.

**Clinical Pearl / High-Yield Fact**
A key point to remember is that the binding of oxygen to hemoglobin is cooperative, meaning that the binding of one oxygen molecule increases the affinity for subsequent oxygen molecules. This is crucial for efficient oxygen transport.

**Correct Answer:** Correct Answer: C. 98.5%