Option 1: The statement says that only statement 1 is correct. According to statement 1, democracy consists of the formation of a government elected by the people. This statement is indeed correct as democracy is a system of government in which power is vested in the people, who choose representatives to govern on their behalf. Therefore, option 1 is incorrect.

Option 2: The statement says that all three statements are correct. Statement 1, as mentioned earlier, is correct. Statement 2 says that in a democracy, those currently in power have a fair chance of losing. This is also true as elections in a democracy allow for a peaceful transfer of power and give the opportunity for new leaders to be elected. Statement 3 says that each vote has one value. This is a fundamental principle of democracy as every eligible citizen`s vote holds equal weight and has the power to influence the outcome of an election. Thus, option 2 is the correct answer.

Option 3: The statement says that only statement 1 is correct. We have already established that statement 1 is indeed correct. However, since statement 2 and 3 are also correct, option 3 is not the correct answer.

Option 4: The statement says that statement 2 and 3