The correct option is C It is found in the small intestine.
The image represents a vilus which are fingerlike projections of the mucosa into the lumen of the small intestine. Each villus has an outer layer of epithelial cells which in turn has thousands of microscopic extensions called microvilli (D). A villus has the rich supply of blood capillaries (B) and a small lymphatic capillary, called a lacteal (A). The whole structure serves to increase the surface area for absorption of digested food. Thus, the correct answer is A.