Assertion(A) : Verbal tests require subjects to give verbal responses either orally or in a written form.
Reason (R) : verbal tests can be administered only to literate people.

Both A and R are true, but R is not the correct explanation of A

The correct answer if Option 2: Both A and R are true, but R is not the correct explanation of A

Assertion(A) : Verbal tests require subjects to give verbal responses either orally or in a written form. This is correct  because verbal tests involve language-based responses, either spoken or written. 
Reason (R) : verbal tests can be administered only to literate people. This is also Correct.

Does R explains A? No. While both statements are factually correct, the Reason (R) does not explain why the Assertion (A) is true. Assertion (A) defines the nature/format of the test (how it is conducted), whereas Reason (R) describes the limitation/demographic of the test (who can take it). The fact that only literate people can take the test is a consequence of it being verbal, not the cause of it requiring oral or written responses.

NCERT : " An intelligence test may be fully verbal, fully non-verbal or fully performance based, or it may consist of a mixture of items from each category. Verbal tests require subjects to give verbal responses either orally or in a written form. Therefore, verbal tests can be administered only to literate people. The non-verbal tests use pictures or illustrations as test items. Raven’s Progressive Matrices (RPM) Test is an example of a non-verbal test.".