This is another one of those questions that has a pretty strong meaning component. Typical GMAT, for better or worse. (For a little bit of context on meaning in SC questions, check out our SC Guide for Beginners:
https://gmatclub.com/forum/ultimate-sc- ... 44623.html.)
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(A) the market for paper is growing faster than it is for all
I don't see any major grammatical issues here. I suppose that there's a worry about pronoun ambiguity, because "it" could, in theory, refer back to "market" or "paper" or "market for paper" -- but I really don't think that's too awful. Sure, it could be better, but it's not a DEFINITE error, and I don't think it's a good reason to eliminate (A), at least not on the first pass through the question.
But the meaning is definitely a little bit off here, even if you assume that the pronoun refers back to "market": "The market for paper is growing faster than it is for all major wood products." Wait, paper IS a major wood product. So how can the market for paper alone grow faster than the market for ALL wood products? That doesn't make sense.
On your first pass through the question, you could be conservative and keep (A), but in a moment, we'll see a better option. (A) isn't our winner.
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(B) the market for paper is growing faster than the market for all other
This solves both of our concerns in (A). The pronoun "it" is changed to "the market" -- so any ambiguity issues are resolved in (B). Plus, "all major wood products" has been changed to "all
other major wood products." That makes much more sense. Keep (B).
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(C) the market for it is growing faster than it is for all other
OK, now the pronouns are getting really messy. "It" shows up twice in a row, and that makes things pretty confusing, since the two "its" are trying to refer back to different referents ("paper" and "market", respectively). You could also argue that the first "it"
should refer to paper, but "paper" actually acts as a modifier earlier in the sentence -- we have "paper production", not just "paper."
In any case, (B) is much, much clearer because it doesn't have those pronouns at all. (C) is out.
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(D) its market is growing faster than the market for all
(D) has the same issue with "all" that we saw in (A): it doesn't make sense for the market for paper to grow faster than the market for ALL wood products, since paper itself is a wood product.
More importantly, we have another goofy pronoun here. The "its" before "market" could plausibly refer to either "wood" or "paper production" -- but neither of those would make sense. And again, "paper" basically functions as a modifier at the beginning of the sentence.
So (D) can be eliminated, too.
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(E) its market is growing faster than it is for all other
I like the use of "other" in (D), but the rest of it has the same pronoun issues that we see in many of the other answer choices. (E) is gone, and (B) is the right answer.