David's explanation is perfect, and that's really the only way to solve this one. I just want to add (since I was talking about this problem with a student a few days ago)...
If you ever get an answer on the GMAT that feels way too easy, it probably is!
A shocking number of students pick 5^10 on this one, even though they think "huh, it's probably too easy to go 12 - 1 - 1." Trust that instinct! Any answer that you can get to by doing just 1 or 2 pieces of simple arithmetic can't be the answer. The GMAT is never that nice! Ask yourself - what's the twist in this problem that I missed?
On this problem, it's "equally spaced." Consecutive powers (for any base other than 0, 1, or -1) will never be evenly spaced, so it can't be as simple as just subtracting exponents.
Ceilidh Erickson
EdM in Mind, Brain, and Education
Harvard Graduate School of Education