The lac operon consists of one regulatory gene (the i gene) and three structural genes (z, y, and a).

The i gene codes for the repressor of the lac operon.

The z gene codes for beta-galactosidase (β-gal), which is primarily responsible for the hydrolysis of the disaccharide, lactose into its monomeric units, galactose and glucose.

The y gene codes for permease, which increases permeability of the cell to β-galactosides. The a gene encodes a transacetylase.
Hence, all the three gene products in lac operon are required for metabolism of lactose.

Lactose is the substrate (inducer) for the enzyme beta-galactosidase and it regulates switching on and off of the operon.
The repressor of the operon is synthesised all-the-time or constitutively from the i gene.

The repressor protein binds to the operator region of the operon and prevents RNA polymerase from transcribing the operon.

In the absence of inducer the the repressor is active and the RNA polymerase cannot access the promoter region and hence the transcription does not take place.
In the presence of an inducer, such as lactose or allolactose, the repressor is inactivated by interaction with the inducer. This allows RNA polymerase access to the promoter and transcription proceeds.