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[blaster]

The publishers, unwilling to shoulder the entire risk, insisted that the author should pay half the cost of the initial print run of his controversial new book.

A. The publishers, unwilling to shoulder the entire risk, insisted that the author should pay half the cost of the initial print run of his controversial new book.
B. The publishers, unwilling to shoulder the entire risk, insisted that the author should be paying half the cost of the initial print run of the author's controversial new book.
C. The publishers, unwilling to shoulder the entire risk, insisted that the author pay half the cost of the initial print run of his controversial new book.
D. Unwilling to shoulder the entire risk, the publishers insisted the author should pay half the cost of the initial print run of his controversial new book.
E. Unwilling to shoulder the entire risk, the author was required by the publisher to pay half the cost of the initial print run of his controversial new book.

can someone explain what is wrong with D?

[saketk]

The publishers, unwilling to shoulder the entire risk, insisted that the author should pay half the cost of the initial print run of his controversial new book.

A. The publishers, unwilling to shoulder the entire risk, insisted that the author should pay half the cost of the initial print run of his controversial new book.
B. The publishers, unwilling to shoulder the entire risk, insisted that the author should be paying half the cost of the initial print run of the author's controversial new book.
C. The publishers, unwilling to shoulder the entire risk, insisted that the author pay half the cost of the initial print run of his controversial new book.
D. Unwilling to shoulder the entire risk, the publishers insisted the author should pay half the cost of the initial print run of his controversial new book.
E. Unwilling to shoulder the entire risk, the author was required by the publisher to pay half the cost of the initial print run of his controversial new book.

can someone explain what is wrong with D?

This is a case of Command Subjunctive mood (yeah I agree another hi-fi terminology) but this is important to learn.

In Option D -- the use of 'should' is incorrect.

BOSSY VERB+THAT+Subject+Command Subjunctive

whenever we use words like "Proposed" "Insisted" -- we eliminate words like "should"

For example -- 1) the mayor proposed that the bill be delayed.

2)The drug maker proposed that the litigation be centralized in the US District Court for the Northern District of Ohio.

You can still ask for expert comments..

[top_business_2011]

The publishers, unwilling to shoulder the entire risk, insisted that the author should pay half the cost of the initial print run of his controversial new book.

A. The publishers, unwilling to shoulder the entire risk, insisted that the author should pay half the cost of the initial print run of his controversial new book.
B. The publishers, unwilling to shoulder the entire risk, insisted that the author should be paying half the cost of the initial print run of the author's controversial new book.
C. The publishers, unwilling to shoulder the entire risk, insisted that the author pay half the cost of the initial print run of his controversial new book.
D. Unwilling to shoulder the entire risk, the publishers insisted the author should pay half the cost of the initial print run of his controversial new book.
E. Unwilling to shoulder the entire risk, the author was required by the publisher to pay half the cost of the initial print run of his controversial new book.

can someone explain what is wrong with D?

D. Unwilling to shoulder the entire risk, the publishers insisted the author should pay half the cost of the initial print run of his controversial new book.

Here 'insisted' bears, for the most part, the meaning of 'should', making the statement redundant. Moreover, the verb 'insisted' calls for a subordinating clause, which has to start with 'that'.

So the answer is C.

Verbs such as insist, recommend, suggest, urge, demand, and mandate require the subjunctive mode. To illustrate:

Correct: I suggested that he be fired.
Incorrect: I suggested that he should be fired. Because, ''should' bears a meaning that changes the tone of the statement.
I recommend that she come to the meeting. Note that it's incorrect to say: I recommend that she should come. For the same reason I mention above.

Hope that helps.