【正确答案】 A

【答案解析】Logical predication; Rhetorical construction
All predicates must have a clear subject; in this sentence, the logical subject of the verb produced is the prolonged peace. During is a concise way to introduce the relevant time period of this peace (the period of the Tokugawa shogunate); the phrase at the time clearly refers to the same time period.
A Correct. The subject of produced is clearly and logically identified; during succinctly provides the time frame.
B The phrase at the time leaves it uncertain what time is being referred to. The subject it of produced does not clearly identify this verb's logical subject, since it is singular yet seems to be intended to refer to two situations previously mentioned, isolation and prolonged peace.
C Being relatively isolated is most likely meant to refer to Japans isolation, but since grammatically it must modify the prolonged peace (the subject of the main clause), the sentence would have an illogical and unintended meaning.
D If at the time is to be used instead of during, it should be followed by of the better choice is to simply use during by itself.
E The use of then after world trade is awkward and redundant, because during later in the sentence supplies the time frame for both Japan's isolation and the period of peace. The structure of the sentence leaves it(s) without a clear referent.
The correct answer is A.