Official Magoosh explanation:
Important subtlety in the non-underlined part
Notice “both encouraged and limited”. The underlined must clearly show this contrast. The use of “and” (see (B)) or a sentence that doesn’t make this contrast clear (see (C)) makes for an incorrect answer choice.
(A) makes the contrast clear and maintains parallelism: “were allowed to...were discouraged from”.
(B) See above note on the subtlety. Also, the “once under a system” is missing the pronoun
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