Answer: (C)
For the group average version of hierarchical clustering, the proximity of two clusters is defined to be the average of the pairwise proximities between all pairs of points in the different clusters. This is an intermediate approach between MIN and MAX. This is expressed by the following equation:
Here, the distance between some clusters. dist({3, 6, 4}, {1}) = (0.2218 + 0.3688 + 0.2347)/(3 ∗ 1) = 0.2751. dist({2, 5}, {1}) = (0.2357 + 0.3421)/(2 ∗ 1) = 0.2889. dist({3, 6, 4}, {2, 5}) = (0.1483 + 0.2843 + 0.2540 + 0.3921 + 0.2042 + 0.2932)/(6∗1) = 0.2637. Because dist({3, 6, 4}, {2, 5}) is smaller than dist({3, 6, 4}, {1}) and dist({2, 5}, {1}), these two clusters are merged at the fourth stage.