Assertion: Western Europe and eastern North America have a highly developed transport system.
Reasoning: Industries are concentrated in Western Europe and eastern North America .

Both Assertion (A) and reasoning (R) are correct and but R is not the correct explanation of A.

The correct answer is Option 2: Both Assertion (A) and reasoning (R) are correct and but R is not the correct explanation of A.

Assertion: Western Europe and eastern North America have a highly developed transport system. This is correct.
Reasoning: Industries are concentrated in Western Europe and eastern North America. This is correct. 

But now the key question is: Does the concentration of industries cause the development of transport? Or did the development of transport lead to industrial growth? As per the NCERT text as reproduced below, the transport systems led to industrial concentration, not the other way around. So R does not explain A.

"Speedy and efficient transport facilities to carry raw materials to the factory and to move finished goods to the market are essential for the development of industries. The cost of transport plays an important role in the location of industrial units. Western Europe and eastern North America have a highly developed transport system which has always induced the concentration of industries in these areas. Modern industry is inseparably tied to transportation systems. Improvements in transportation led to integrated economic development and regional specialisation of manufacturing."