The last part of the sentence uses "such firms" which will need an antecedent in the earlier sentence.

So A,C, D are out.

"firms' survival" is possesive and "such firms" can't refer back to it.

Thus B

Correct idiom: require A to B. In that case, require firms to survive. Because of "such firms" i chose B.

A – last part of the sentence refers to a firms. We need to find a sentence where “firms” is clearly stated. Eliminate
B – Keep
C – No reference to firms. Eliminate
D – same as C
E – "firms' survival" is possesive and "such firms" can't refer back to it.

such noun
can not refer to
possesive noun

that point is the thing we learn from this problem

Dear Fame,
The correct idiom for the active use of the verb is -----require + [noun] + [infinitive] ----
ACTIVE FORM: Firms require enormous research and development expenditures to survive.
This sentence is NOT using the verb "to require" in its active form. Instead, it is using the past participle form, "required", as a participle modifying the noun phrase "enormous research and development expenditures." The rules for the past participle follow the rules for the passive use of the verb. For many verb, the subject in the active form would become the object of the preposition "by" in the passive form ----
I read the book. ----> The book was read by me.
Idiomatically, the preposition "by" sounds unnatural with the passive verb "required" in this particular construction. Because the former subject, here "firms", is now essentially the subject of an infinitive phrase, it must take the preposition "for" --- the preposition "for" is the preposition we use to denote the subject of an infinitive or infinitive phrase.
I want for the teacher to help you.
For a homerun hitter to hit over .300 is a notable achievement.
The lawyer argued that it was not a crime for a policemen to use deadly force in an ambiguous situation.
When we change the active form above to passive form, the former direct object, "enormous research and development expenditures" becomes the subject (that always happens in a change from active to passive), and because we still have an infinitive phrase, the former subject, "firms", becomes the object of the preposition "for", becoming the subject of that infinitive phrase:
ACTIVE FORM: Firms require enormous research and development expenditures to survive.
PASSIVE FORM: Enormous research and development expenditures are required for firms to survive.
Now, we are ready to consider the sentence in this question. The past participle, "required", follows the rules & structures of the passive form of the verb "are required."
Because of the enormous research and development expenditures required for firms to survive in the electronics industry, an industry marked by rapid innovation and volatile demand, such firms tend to be very large.
That's (B), the OA version of the sentence.

Does all this make sense?
Mike
_________________

Mike McGarry
Magoosh Test Prep

Dear gmatpart2,

This is a tricky point of idiom. Both "require for" and "require of" are correct idioms. The preposition "for" is used when we are discussing an object/tool/implement/ability, something needed to accomplish a task. The object of "for" is the task.
= He requires a calculator for any computations beyond single digit.
= MLB players require excellent vision for hitting pitches.
The preposition "of" is used when we are discussing individuals upon whom demands are placed.
= I require daily studying of my students.
= The Treaty of Versailles (1919) required of Germany the most draconian conditions.
Here, both idioms are relevant.
Does this make sense?
Mike
_________________

Mike McGarry
Magoosh Test Prep

Agree with aquarius24 explanation....answer should be B