The correct option is B Lactose
Lactose is an inducer in this operon, hence called lac operon. It is a substrate for the enzyme ꞵ-Galactosidase.
Lactose regulates the switching on and off of the operon and that is why it is termed as inducer.
In absence of lactose the repressor protein binds to the operator and blocks the transcription but when lactose is present it binds with the repressor protein and transcription takes place smoothly.
Lactose is converted to allolactose by beta galactosidase, it acts as an inducer.
Lactase is an enzyme that breaks down lactose in the human intestine.
Lac insects produce commercially available lac resins or gum which are of huge economical value. However, they have no relation to the term lac in lac operon.