Rearrange the parts of the sentence in correct order.
This too, is a classic
P-"stock versus flow" problem, where
Q-focusing only on the latter
R-completely distorts the picture

Let's assemble the segments contextually:
The fixed introductory line is "This too, is a classic".

It naturally connects to P to complete the noun phrase: "This too, is a classic 'stock versus flow' problem, where".

The word "where" acts as a relative adverb introducing a clause. Q supplies the subject of this clause: "focusing only on the latter".

R provides the verb phrase that follows the subject: "completely distorts the picture".

Thus, the correct and meaningful arrangement is PQR.