The network layer is responsible for routing data through the network, but with a broadcast network, routing is not needed.
Other functions, such as sequencing, flow control, error control between end systems, can be accomplished at layer 2,
because the link layer will be a protocol directly between the two end systems, with no intervening switches.
So it would seem that a network layer is not needed.
Second, consider the network layer from the point of view of the upper layer using it.
The upper layer sees itself attached to an access point into a network supporting communication with multiple devices.
The layer for assuring that data sent across a network is delivered to one of a number of other end systems is the network layer.
This argues for inclusion of a network layer.
In fact, the OSI layer 2 is split into two sublayers.
The lower sublayer is concerned with medium access control (MAC), assuring that only one end system at a time transmits;
the MAC sublayer is also responsible for addressing other end systems across the LAN.
The upper sublayer is called Logical Link Control (LLC). LLC performs traditional link control functions.
With the MAC/LLC combination, no network layer is needed .
Broadcasting is used in the following situations:
Address Resolution Protocol (ARP) uses broadcasting to map MAC addresses to IP addresses.
ARP dynamically binds the IP address (the logical address) to the correct MAC address.
Before IP unicast packets can be sent, ARP discovers the MAC address used by the Ethernet interface where the IP address
is configured.
Dynamic Host Configuration Protocol (DHCP) uses broadcasting to dynamically assign IP addresses to hosts on a network segment or subnet.
So here correct option is Network layer.
