The correct answer is option (C):
School
The relationship between "Flies" and "Swarm" is a collective one. A swarm is a large group of flies. We are looking for another pair of words where the second word represents a collective noun for the first word.
Looking at the options, "School" is the correct answer. A school is a group of dolphins. The other options are incorrect: "Skulk" (a group of foxes), "Pack" (a group of wolves), "Litter" (a group of offspring, particularly of certain animals, like puppies), and "Colony" (a group of animals living together, usually insects, or, in a broader sense, people).