The correct answer is C. Postconventional level
Explanation:
In the Postconventional level of moral development, the individual is aware of rules, laws. and norms that are part of society, but they also understand the importance of living according to own principles and questioning laws and rules before obeying them. This includes understanding laws need to be changed if they do not promote justice or accomplish a certain purpose. This level is part of Kolhberg's theory about moral development and it is only possible after the pre-conventional and conventional levels. Besides this, this is the stage or level Lillian is in because she understands the importance of laws but also their flexibility, which means she does not only obey laws and rules but acts due to her own principles.