Its the *costs*. It has S-V error. since there is has in the statement, it should be *cost*.

the subject is "reduction" which is singular and hence the singular "has". the reduction in X has created Y. X merely qualifies the reduction.

Thanks scoobydooby and madhur_ahuja for your responses. Your responses have confirmed the confusion in my mind.

However, I am leaning towards the subject being "Reduction".

But, I want to know the rationale behind it. For the sake of comparison, I have included one more similar sentence.

Sentence 1: The reduction in costs of data processing due to advances in processor technology has created a good opportunity for small businesses.

Sentence 2: The reduced costs of data processing due to advances in processor technology have created a good opportunity for small businesses

The intent of both sentences is the same. However, grammatically, I think Sentence 1 Subject is reduction. And Sentence 2 subject is costs.

Is there a rule in Grammar that can help us in making this distinction. One rule that comes to mind is "subject typically never resides in prepositional phrase". But I do not want to blindly follow the rule without understanding it.

Any input is welcome!

rsadana1 wrote:The intent of both sentences is the same. However, grammatically, I think Sentence 1 Subject is reduction. And Sentence 2 subject is costs.

You are absolutely right. IMO what you are saying is correct, at least in this case that subject never appears in prepositional phrase...

rsadana1 wrote:Thanks scoobydooby and madhur_ahuja for your responses. Your responses have confirmed the confusion in my mind.

However, I am leaning towards the subject being "Reduction".

But, I want to know the rationale behind it. For the sake of comparison, I have included one more similar sentence.

Sentence 1: The reduction in costs of data processing due to advances in processor technology has created a good opportunity for small businesses.

Sentence 2: The reduced costs of data processing due to advances in processor technology have created a good opportunity for small businesses

The intent of both sentences is the same. However, grammatically, I think Sentence 1 Subject is reduction. And Sentence 2 subject is costs.

Is there a rule in Grammar that can help us in making this distinction. One rule that comes to mind is "subject typically never resides in prepositional phrase". But I do not want to blindly follow the rule without understanding it.

Any input is welcome!

IMO the simplest and the best rule is eliminate middlemen as Manhattan says...

in sentence one everything from "in" onwards is junk.
...reduction....has...
in sentence two everythinh from "of" onwards is junk.
....Costs....have....