3. which of these sentences contains a prepositional phrase 1) milo meets king azaz in dictionopolis 2) milo meets a young boy metts king azaz 3) dictationpolis is close by 4) milo travels far

A prepositional phrase is a group of words that lacks either a vern or a subject, and that functions as a part of speech.  It normally contains a preposition and a noun or a preposition and a pronoun. 

There are multiple rules for prepositional phrases that you are able to look up for further clarification. 

For this question I want to say that choice 3 contains the prepositional phrase "is close by".