Your concpet is very correct. But a smalle clarification.
In modified 3 way merge sort,
T(N)=3T(N/3)+O(N) // 3T(N/3) is to divide the array and O(N) to merge elements, that are multiple of 3.
Thus by Masters' theorem , final answer will be
O(NLOG 3 N)
But N LOG 3 N = N (log 2 N / log 2 3) = 2.09 (N log 2 N) > N LOG 2 N
Thus 3 way merge sort is slower than 2 way merge sort
Answer will be C