Step 1: Doppler Effect Concept
When the source and observer move towards each other, the relative speed of sound increases for the observer, leading to a higher apparent frequency ($n'>n$).
Step 2: Wavelength Analysis
When the source moves towards the observer, the waves are "bunched up" in front of the source, leading to a decrease in the observed wavelength ($\lambda'<\lambda$).
Step 3: Conclusion
Apparent frequency increases and apparent wavelength decreases.
Final Answer: (C)