This question asks who can’t be third. You should look at the setup diagrams for reference:
In scenario 1, M is third. So, we can eliminate answer B, and concentrate on the other scenario. In scenario 2, there are only four open spaces, and we have to place L_O, S and N. When I drew this, I switched to a four space diagram, since MTP are fixed in 5-6-7. So the four space diagram shows spaces 1-2-3-4:
This diagram shows that both L and O can be third (since they’re reversible). Next, place L_O 2nd and 4th. Place L early, in order to allow N to go after:
This proves that N can go third. And it also shows that S can’t. If we swapped S and N, then N would be before L, violating rule 1. E is CORRECT.
With these diagrams, I hope to show not just why the right answer is right, but also how to get to it quickly. You should think in terms of which placement is easy, and which is hard. Placing L early is easy, because of N and rule 1. Place L later is hard or impossible. So always place L early when trying to make a working diagram.
You should also think in terms of what can be reversed. Often, one diagram disproves two answers.
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