Correct option is (2) \(\mathrm{E}_{\text {cell }}=\mathrm{E}_{\text {cell }}^{\mathrm{\circ}}+\frac{\mathrm{RT}}{2 \mathrm{~F}}\ l n \frac{\left[\mathrm{Ag}^{+}\right]^{2}}{\left[\mathrm{Mg}^{2+}\right]}\)
According to Nernst equation :-
\(\mathrm{E}=\mathrm{E}^{\circ}-\frac{\mathrm{RT}}{\mathrm{nF}}\ l n\ \mathrm{Q}.\)
Cell reaction :-
\(\mathrm{Mg}_{(\mathrm{s})}+2 \mathrm{Ag}_{(\mathrm{aq})}^{+} \rightleftharpoons 2 \mathrm{Ag}_{(\mathrm{s})}+\mathrm{Mg}_{(\mathrm{aq})}^{+2}\)
\(\Rightarrow \mathrm{Q}=\frac{\left[\mathrm{Mg}^{+2}\right]}{\left[\mathrm{Ag}^{+}\right]^{2}}\)
\(\Rightarrow \mathrm{E}=\mathrm{E}_{\mathrm{Cell}}^{\mathrm{\circ}}-\frac{\mathrm{RT}}{2 \mathrm{~F}}\ l n \left[\frac{\left[\mathrm{Mg}^{+2}\right]}{\left[\mathrm{Ag}^{+}\right]^{2}}\right]\)