Final answer:
Lawrence Kohlberg's Theory of Moral Development suggests that as children age, they go through three stages of moral reasoning: pre-conventional, conventional, and post-conventional, with understanding growing more sophisticated at each level.
Step-by-step explanation:
The theory that states the ability to make moral judgments improves as a child ages is Lawrence Kohlberg's Theory of Moral Development. Kohlberg outlined three main stages of moral development: pre-conventional, conventional, and post-conventional.
In the conventional stage, children are primarily concerned with avoiding punishment and seeking reward. As they grow into the conventional stage, generally reached in the teen years, they start to consider society's views on right and wrong and make decisions based on social approval and order.
The final post-conventional stage is where individuals think in abstract terms of justice and rights, recognizing that legality and morality may diverge. Carol Gilligan proposed that gender might influence moral development, suggesting that boys and girls may develop different moral perspectives.
Regarding the provided multiple-choice question, the correct answer is (c) Children begin to consider what society considers moral and immoral. This corresponds to the conventional level of Kohlberg's theory, where social norms and the perspectives of others become integral to a child's moral reasoning.
It's important to note that Kohlberg's work on moral development also indicates that not all individuals will reach the same level of moral reasoning and that moral behavior can differ from moral reasoning, challenging the progression through these stages.