Incremental SPF is the correct solution because the problem specifically states that Type 1 or Type 2 LSAs force the OSPF process to recompute the entire shortest path tree. Cisco OSPF documentation states that when changes to a Type 1 or Type 2 LSA occur, the entire SPT is normally recomputed, and that incremental SPF allows the system to recompute only the affected part of the tree. This improves convergence and reduces CPU use because the router does not have to run a full Dijkstra calculation for every topology change. BFD detects failures quickly, but it does not change how OSPF recalculates the SPT after the LSA arrives.
Standard SPF is the default full calculation behavior and therefore does not solve the optimization requirement. PRC is associated with partial route calculation behavior in some link-state contexts, but for this OSPF question the Cisco feature name is iSPF. Reference topics: OSPF incremental SPF, Type 1 LSA, Type
2 LSA, SPF optimization, campus OSPF scaling.