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(b) SETTLE means to resolve; 1 uses this word to convey how Hooke was asked to resolve many of the disputes. SETTLE also means to reside in a place; 2 uses this word to convey how the French colonists began to reside along the coast and founded New Orleans. Thus, (b) is the right answer. 3 is incorrect as it confuses SETTLED with SET; the phrase SET UP means to establish or arrange something; the sentence talks about how the author arranged the hardware and software.
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