Final answer:
In markets with little or no product differentiation and prequalified bidders, the cost-based pricing approach used is cost-plus pricing, where suppliers calculate the production cost and add a markup. The lowest price is often used as the basis for selecting suppliers.
Step-by-step explanation:
In markets where there is little or no product differentiation, bidders are prequalified, and bids must meet product specifications and delivery dates to be considered, the cost-based pricing approach used is cost-plus pricing. In this approach, suppliers calculate the cost of producing the goods or services and add a markup or profit margin to determine the selling price. However, in the case of selecting suppliers, the criteria for selection is often based on the lowest price among those meeting the required specifications.