Step 1: Recall the effect of density altitude.
An increase in density altitude means
\[
\boxed{\text{air density decreases}.}
\]
Lower air density causes
• reduced engine thrust,
• reduced propeller efficiency,
• reduced wing lift at a given true airspeed.
Step 2: Determine the effect on take-off distance.
Since the aircraft produces less lift at the same speed,
\[
\boxed{\text{a higher True Airspeed is required for lift-off}.}
\]
Also, because the engine develops less thrust,
\[
\boxed{\text{the aircraft accelerates more slowly}.}
\]
Therefore, the take-off ground roll distance increases.
Hence,
\[
\boxed{\text{It increases the distance because the required True Airspeed for lift-off increases and also the engine thrust decreases}.}
\]
Thus,
\[
\boxed{(C)}
\]
is the correct answer.