What happens when two atoms collide they each vibrate faster energy is lost energy is transferred there is a net energy change.

There is no energy change that happens due to collision so there is only transfer of energy taking place. Therefore, option C. Energy is transferred is correct.

In gaseous atoms when collision occurs it is elastic collision and no kinetic energy is lost. According to the kinetic theory of gases, the state functions such as pressure, temperature, volume values may be changed but net energy of the system remains constant.