The correct answer is C.
A state may require a passport in order to cross its internal border.
Free movement across an internal border means movement without stopping at a frontier. People are allowed to cross one state's borders and enter into another state without being detained and asked questions about their reasons for travelling. This is done now in the United States and many countries all over the world, especially in the European Union with its Schengen zone.
A state requiring a passport for anyone wanting to enter it would stop the free movement altogether. Apart from the inconvenience of getting a passport ( time, money ), a passport holder may still be denied access to a particular country or state. Free, unlimited movement would no longer exist and border patrols and points would have to be established at each crossing.