The correct approach is to use a separate Databricks notebook to define and import unit test functions. This allows the data engineer to run tests without modifying the production notebooks. By using %run commands in the test notebook, the production notebooks' functions can be imported and tested using standard Python frameworks like unittest or pytest. Options B and D involve restructuring code into files or altering production notebooks, which may not be feasible. Option C relates to test data, not the testing framework setup, making it irrelevant to the specific question about executing unit tests.