According to Adam Smith, the ideal economic environment for a

OFFICIAL EXPLANATION



THE PROMPT


The underlined portion is an appositive—something that describes or gives more information about the noun free-market capitalism.

The singular subject open competition requires the singular verb yields.
THE OPTIONS

• subject/verb agreement
→ the singular subject competition does not agree with the plural verb yield

• The word where should be used to refer to an actual physical location, not to a market structure.
See "Notes," below: in rare cases, the word where can refer to community or society.
ELIMINATE A

• subject/verb agreement
→ the singular subject competition does not agree with the plural verb yield

• the pronoun they is awkward but not ambiguous
→ The word they could theoretically stand for consumers, products or producers. Those three are plural nouns.
But the only logical antecedent is products. Neither producers nor consumers are manufactured or sold.
On the first pass, do not eliminate an option on the basis of pronoun ambiguity.
Look for other errors first.
ELIMINATE B


• I do not see any errors

• subject/verb: the singular verb yields agrees with the singular subject open competition.


• modifier error/nonsensical
→ consumers are not manufactured or sold at the lowest possible prices.
→ manufactured and sold are obviously intended to modify products, the head noun in the noun phrase products for consumers.

→ Why are these noun modifiers different from which and than? Why can't they "reach back" and modify their noun, products?
I have demonstrated in other OEs that the words which and that can "reach back over" other modifiers of a noun, usually prepositional phrases, to modify a noun.
So why can't manufactured "reach back over" consumers (the object of the prepositional phrase attached to products) in order to modify products?
Answer: because manufactured is a past participle (a verbED), and on the GMAT, a past participle can modify only the immediately preceding word, whether or not that past participle is preceded by a comma. [Heads up: you just read an instance in which whether or not is correct. Rare.]
See Notes, below, for more details about this modifier.

ELIMINATE D


• The use of where to refer to a market structure is unidiomatic.

• Contrast is not needed
→ The use of but is incorrect because there is no contrast implied in the sentence.
ELIMINATE E

The answer is C.

Notes

• WHERE

On the GMAT, the word where can refer to community or society (or part of a society, including something such as "bourgeois culture").

Spoiler alert!
Official question #1: here.
Official question #2: here.

Be careful: although it is permissible to use where to refer to something that is not an actual physical location, such usage is not common on the GMAT.

• Past participles (verbED words)

On the GMAT, can modify only the immediately preceding noun, whether the participle (verbED) is preceded by a comma or not.

In SWE, the situation is a little different.
Past participles that are not preceded by a comma do indeed modify the immediately preceding word, as is the case in option D.
But past participles that are preceded by a comma are allowed to modify entire clauses. Not so on the GMAT—yet.

I say "yet" because this GMAC guideline differs from the analogous rule in almost every other grammar or style book.
I do not recall ever having seen an exception in an official question, but this area may be "ripe for change."
Takeaway? If the other four answers are horrible and you see [COMMA + PAST PARTICIPLE] modifying an entire previous clause in the fifth answer and it makes sense, pick that answer.

COMMENTS

NawalDwivedi , once again, welcome to SC Butler.

These answers range from very good to outstanding.
Lucky are the aspirants who follow.

1) "Where" is used to present a geographical location not a condition or state We can eliminate A/and E; In A There is Subject verb disagreement also and E introduction of But brings unwanted contrast and pronoun "they" is ambiguous.
2) We can Eliminate B because of Subject verb disagreement and ambiguous pronoun "They".
3) In D "Manufactured and sold at the lowest possible price" illogically modifies consumers .

(C) is the right answer

My answer is (C).

(A) SVA issue: "open competition among producers yield" should be "...yields".
(B) See above
(D) "manufactured and sold at the lowest possible prices" modifier "consumers", resulting in a scenario that has yet to become a reality.
(E) In GMAT, "where" can only modify a physical location, not a structure or a scenario.
Besides, "they" in "but they" can refer to "consumers", resulting in a scenario that has yet to become a reality.
Moreover, "but" in "but they" introduces an unexpected contrast.

According to Adam Smith, the ideal economic environment for a society is free-market capitalism, a structure where open competition among producers yield the best products for consumers, manufactured and sold at the lowest possible prices.

A) a structure where open competition among producers yield the best products for consumers, manufactured and sold at the lowest possible prices. -> "where" is required for a location or place. And, we have "open competition......yield.." is having SVA error. Incorrect.

B) a structure in which open competition among producers yield the best products for consumers, and they are manufactured and sold at the lowest possible prices. -> same SVA error as A. Incorrect.

C) a structure in which open competition among producers yields the best products for consumers—products manufactured and sold at the lowest possible prices. -> It is better and we have clear meaning. Let's keep it.

D) a structure in which open competition among producers yields the best products for consumers manufactured and sold at the lowest possible prices. -> does "consumers manufactured and sold at the lowest possible prices". It is not the intended meaning. Incorrect.

E) a structure where open competition among producers yields the best products for consumers, but they are manufactured and sold at the lowest possible prices. -> Same error as A. Incorrect.

So, I think C.

C imo is the correct answer.

In option A and E use of relative pronoun where is not correct. Where should refer to a place and in this option it is referring to some structure, which is not a place. Use of In which would be appropriate.
In option B and they are manufactured refers to the ideal economic environment , changing the original meaning. Products are manufactured not economic environment.
In option D manufactured wrongly modifies consumers. Consumers can never be manufactured. It is completely senseless !!
So by POE C is correct.

According to Adam Smith, the ideal economic environment for a society is free-market capitalism, a structure where open competition among producers yield the best products for consumers, manufactured and sold at the lowest possible prices.


A) a structure where open competition among producers yield the best products for consumers, manufactured and sold at the lowest possible prices.
yield should yields because open competition is singular. Eliminate.

B) a structure in which open competition among producers yield the best products for consumers, and they are manufactured and sold at the lowest possible prices.
yield should yields because open competition is singular. Eliminate.
The they is not problematic if you think so because there is only one logical referent i.e Products.
You cannot say that they can also refer to producers/consumers. This type of reference is illogical.

C) a structure in which open competition among producers yields the best products for consumers—products manufactured and sold at the lowest possible prices.
S-V agreement reached.
Usage of em-dash is giving extra information about how consumers are getting benefited.Keep.

D) a structure in which open competition among producers yields the best products for consumers manufactured and sold at the lowest possible prices.
Consumers manufactured and sold at the lowest possible prices.
What the heck ?? Eliminate

E) a structure where open competition among producers yields the best products for consumers, but they are manufactured and sold at the lowest possible prices.
We are not showing contrast in the sentence at all.
Usage of but is incorrect.

IMO C.

The official explanation is here.

Thanks for the detailed explanation, generis.
Question: What does "SWE" stand for?