
Explanation:
Box 1: No
Don't choose a parent label as the default label, or configure a parent label to be automatically applied (or recommended). If you do, the parent label cannot be applied.
https://learn.microsoft.com/en-us/microsoft-365/compliance/sensitivity-labels?view=o365- worldwide Box 2: No User 2 will not see the General label because it has not been published to a group they belong to.
Box 3: Yes
As member of Group 2, User 3 has access to labels with higher priorities (Top Secret - Low, Medium, Hight) than the labels that User 1 has, thus can replace any label set by User1.