Cadmia and Rhodia specialize in the production of textiles and agricultural products respectively. They are the best at their respective specializations. Cadmia trades textiles with Rhodia in exchange for agricultural products. Which of the following is illustrated by this form of trade between Cadmia and Rhodia? A. The concept of absolute advantage B. The position of a nation regarding the components of production C. Ricardo's theory of comparative advantage

The key statement here is that "They are the best at their respective specializations" and their decision to trade the good that they are most effective/better at producing.

The concept of absolute advantage refers to:

when a producer can produce a good or service in greater quantity for the same cost, or the same quantity at lower cost, than other producers.
By specialization, division of labor, and trade, producers with different absolute advantages can always gain over producing in isolation.
Absolute advantage is related to comparative advantage but differs slightly.

Countries with an absolute advantage can decide to specialize in producing and selling a specific good or service and use the funds that good or service generates to purchase goods and services from other countries.

Through specialization in the products that they each have an absolute advantage in and then trading products, can make all countries better off, as long as they each have at least one product for which they hold an absolute advantage over other nations.

Comparative advantage however:

Comparative advantage suggests that countries will engage in trade with one another, exporting the goods that they have a relative advantage in productivity.

Absolute advantage refers to the uncontested superiority of a country to produce a particular good better. Comparative advantage introduces opportunity cost as a factor for analysis in choosing between different options for production.