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Apart from a small chain of retail outlets, __________ non-fiction is the source of Baxter Books' revenues.

a. publisher
b. publishes
c. publishing
d. to publish

The answer is 'c'. Why not 'd'? Sometimes It is very difficult for us (non native, even my teacher(also non native) doesn't know exactly, everybody doesn't know) to understand the difference between infinitive form and gerund form.
What is difference between 'publishing' and 'to publish'? Why not 'to publish'?

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The infinitive or infinitive phrase can indeed be the subject of the verb. So we cannot reject d) on simple grounds.

To swim the English Channel is her dream.

To succeed requires diligence.

To travel from New York to Washington by train takes several hours.

However, the infinitive refers to the idea of the action, an action that could possibly occur, but it does not refer to an instance of the action happening in finite, real time.

The verb phrase 'is the source of revenue' wants as subject a form that expresses an action actually taking place in time, not a form that expresses the idea of the action outside of time. Revenue is earned by the activity, not by the timeless idea of the activity. Publishing refers to the ongoing activity, the action happening in time.

To eat is how we stay alive. ungrammatical

Eating is how we stay alive. grammatical

P.S. But with "why" (reason/intention) we want the form that is outside time:

To visit Santa Claus is why we went to the North Pole. grammatical

Visiting Santa Claus is why we went to the North Pole.ungrammatical

P.P.S. Things we do versus things we have in mind.

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  • It's probably worth noting that in the the first examples, "Swimming .. is her dream," and "Travelling ... takes several hours." are both OK too. As would be "Travel ... takes several hours," and "Success requires diligence" (but not "Succeed requires dilligence.").
    – Joshua Taylor
    Commented Sep 26, 2016 at 15:05
  • @Joshua Taylor. Yes. The gerund sometimes works alongside the infinitive, but not always. See the P.S.
    – TimR
    Commented Sep 26, 2016 at 15:06
  • @Joshua: The third example would be "Succeeding requires diligence", which looks OK to me.
    – TonyK
    Commented Sep 26, 2016 at 18:24
  • @TonyK Yes, it sounds fine (if a little unnatural) to me too. I was just highlighting the difference between cases like "To X requires Y" where "X requires Y" works (like travel), and cases like "To X requires Y" becomes "Xing requires Y" (like succeed).
    – Joshua Taylor
    Commented Sep 26, 2016 at 18:27

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