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B
They cannot synthesize functional beta galactosidase.
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C
They cannot synthesize transacetylase.
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D
They cannot transport lactose from the medium into the cell.
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Solution
The correct option is D They cannot synthesize permease.
The gene product of lac-Z is β-galactosidase which cleaves lactose, a disaccharide, into glucose and galactose. Lac-Y encodes Beta-galactoside permease, a protein that becomes embedded in the cytoplasmic membrane to enable transport of lactose into the cell. The E.coli with lac-z gene cannot synthesize permease because permease is synthesized by the lac-Y gene.
So, the correct answer is 'They cannot synthesize permease'.