Overall explanation Correct option:

The health check type of your instance's Auto Scaling group, must be changed from EC2 to ELB by using a configuration file - By default, the health check configuration of your Auto Scaling group is set as an EC2 type that performs a status check of EC2 instances. To automate the replacement of unhealthy EC2 instances, you must change the health check type of your instance's Auto Scaling group from EC2 to ELB by using a configuration file.

Incorrect options:

Health check parameters were configured for checking the instance health alone. The instance failed because of application failure which was not configured as a parameter for health check status - This is an incorrect statement. Status checks, by definition, cover only an EC2 instance's health, and not the health of your application, server, or any Docker containers running on the instance.

Auto Scaling group doesn't automatically replace the unhealthy instances marked by the load balancer. They have to be manually replaced from AWS Console - Incorrect statement. As discussed above, if the health check type of ASG is changed from EC2 to ELB, Auto Scaling will be able to replace the unhealthy instance.

The ping path field of the Load Balancer is configured incorrectly - Ping path is a health check configuration field of Elastic Load Balancer. If the ping path is configured wrong, ELB will not be able to reach the instance and hence will consider the instance unhealthy. However, this would then apply to all instances, not just once instance. So it does not address the issue given in the use-case.