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Explanation:

If builders are forced to pay penalty for bad quality then they are more likely to deliver good quality, though it would be difficult to force the penalty on unregistered builders. The chances of unregistered builder improving quality because of penalty are lower, as the builder can, more easily, escape the clutches of law. Hence, the right set of option should start with 3. It gives us 3 as the right answer.
Hence, the correct answer is option 3.

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