Repressor binds to operator of lac operon

The correct option is D Structural genes Z, Y and A fail to transcribe.
In presence of lactose, allolactose; an isomer of lactose binds to the repressor and causes an allosteric shift. The altered repressor cannot bind to the operator, allowing RNA polymerase to transcribe the lac genes. The repressor, encoded by the regulator gene, bind to the operator region which is located just upstream the binding site of the RNA polymerase and hence, prevent the binding of the RNA polymerase and transcription of structural genes is turned off. The lac Z, lacY and lac A genes in lac operon are the structural genes that code for $\beta$-galactosidase (converts lactose into glucose and galactose), $\beta$-galactoside permease (transports lactose into the cell) and $\beta$-galactoside transacetylase respectively. Binding of the repressor to RNA polymerase turns the gene expression off and hence, none of the above-mentioned enzymes are synthesized.

Thus, the correct answer is option D.