Final answer:
The 'Typical' installation option installs the most commonly used features and capabilities, offering a balance between speed and functionality for the average user.
Step-by-step explanation:
The installation option that installs the most commonly used set of features and capabilities in application software is C) Typical.
This option is designed to provide a balance between a quick installation and a useful selection of features for the average user. It's not as minimal as an Express installation, which usually only installs the fastest or most necessary components, nor is it as inclusive as a Complete installation, which installs all available features. The Custom option allows users to select individual components to install, which tends to be more time-consuming and is often utilized by advanced users or those with specific needs.