A) Modifiers - Incorrect. It begins with a modifier that describes cocaine derivatives, not the government.

B) Modifiers - See A

C) Modifiers - See A

D and E try to fix this error by using a full clause rather than a modifier for cocaine derivatives

D) Subject-Verb & Pronoun agreement - Who is they? Who were selling? The government is singular so we can't say "they were selling" when talking about the government.

E) Correct. "They were sold" is in the passive voice. In this case, what were sold? "They" correctly stands for "cocaine derivatives".

Note that it's ok for E to be next to "the government". You might feel that this is a misplaced modifier but it's not. A modifier is a word or phrase that describes something else in the sentence (ie. the target is not within the modifier). E is not a modifier because it contains the subject described ("they"). Compare it to A, B, or C which talk about derivatives but contain neither "derivatives" nor "they". That's why A, B and C are misplaced modifying phrases while E is not a modifier.

(I studied with OG, MGMAT SC and GMATFix Verbal Flashcards)

TedCornell wrote:A) Modifiers - Incorrect. It begins with a modifier that describes cocaine derivatives, not the government.

Sold over the counter at the turn of the century, the government .....
The above sentence to me means that the government was sold over the counter, not the cocaine. I hope that is what you meant in your explanation.

I am not sure I understood your paradoxical explanation on why E is correct over D. The same explanation you gave for D holds good for E as well. Why can't the 'they' refer to the government (if this were to be a wrongly written sentence)? Can you please elaborate?

In D and E, "they" does not replace the same noun.

In D, "They were selling them". Who is "they" talking about here? Who is selling them? Which noun does "they" replace?

The government was selling them OR The cocaine derivatives was selling them?

The meaning is that the government was selling them. This is a problem because the government is singular and cannot be replaced with "they"; hence, D is incorrect.

Now forget all that. Consider E: "They were sold over the counter" Who is "they" talking about this time? Who/what was sold over the counter? Which noun does "they" replace?

The government was sold over the counter OR The cocaine derivateves were sold over the counter?

The meaning is that the derivatives were sold over the counter; hence in E, "they" correctly replaces the plural noun "derivatives" whereas in D, "they" incorrectly replaces the singular noun "government"

Thank you for the explanation.