Final answer:
The project manager should issue a clarification to the contractor about the incorrect finish tag before work begins in the area to correct the error and avoid future complications.
Step-by-step explanation:
When the project manager realizes that an incorrect finish tag was used on one of the bathroom elevations during construction, the most appropriate action to take is to issue a clarification to the contractor prior to the beginning of work in the affected area.
This step ensures that the error is corrected before any construction takes place, preventing potential rework or discrepancies that would arise from the use of the incorrect finish tag. Ignoring the issue could lead to significant problems down the line, modifying the project scope could be costly and unnecessary, and terminating the contract is an extreme measure that does not efficiently solve the problem at hand.