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Good Q. Would take you little time, but your odds of getting it wrong gets really high in this one.

The key here is to not to make the mistake many people would've - i.e. considering 4.9 percent as an absolute number, that's NOT the manufacturing output for the year that ended in February but is the INCREASE in output

"they" - incorrect pronoun usage in this sentence, since they can refer to people and we're talking about the manufacturing output - straight eliminate (A) and (B)

(C) is the correct usage here, since what it essentially conveys is that Manufacturing output rose X percent in the time period A, far more than it did in time period B.

(D) far higher than in - you can eliminate this blindly

(E) is an interesting answer choice and I'm sure many will fall into the trap here, now had it been like the following:

Manufacturing output in the nation of Okroshkia was 4.9 percent in the year that ended in February, far higher than it was in 12 months that ended in the previous quarter.

OR

Manufacturing output in the nation of Okroshkia was $100 Billion in the year that ended in February, far higher than it was in 12 months that ended in the previous quarter.

In the above cases, the usage of far higher than it was in might have been correct, but since we're not comparing an absolute value, but the rate of increase, this usage is incorrect in the given context, and hence, (E) is OUT too

Left with (C), this indeed is fitting in the context and is the correct answer choice!
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IMO-C

Manufacturing output in the nation of Okroshkia rose 4.9 percent in the year that ended in February, far more than they did in 12 months that ended in the previous quarter.
SV Agreement Error

Output- Singular , They - Plural....... Correct one --"IT"

(A) more than they did --Incorrect ----SV Error
(B) more than they were --Incorrect ---SV Error
(C) more than it did----Correct
(D) higher than ---Incorrect ... Incomplete Comparison-- Far Higher Than What?...
(E) higher than it was----Incorrect--- For comparison here "Far more than" is better compared to "Far higher than"

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