(C)    Correct. If the apparatus contracted in the direction of motion by the proper amount, the two path lengths would be different but the return time would be the same. Consequently, the two beams would constructively interfere the same as if the apparatus were at rest. This explanation was first proposed by Hendrik A. Lorentz and George F. Fitzgerald in the late 1890s and is called the Lorentz-Fitzgerald contraction, or simply the Lorentz contraction. No justification was given for this contraction other than the fact that it explained the null result of the Michelson-Morley experiment.

Today we recognize that Maxwell's electromagnetic field equations predict that moving charges will have their fields distorted by just the right amount to produce this needed contraction. In other words, because the fields around moving charges are different from the fields around static charges, the spacing between the moving charges within a structure will be different from the spacing between those charges at rest. Therefore, even classical electrodynamics predicts that moving objects contract along their direction of motion.

This electromagnetic contraction is perfectly consistent with the length contraction of special relativity. But the explanations for the contractions are different. The electromagnetic contraction is based upon the properties of electrodynamics expressed in Maxwell's equations while the relativistic contraction is based upon the principle of relativity. Of course, the Lorentz-Fitzgerald contraction is consistent with either explanation.