Carboxylic acids having an a-hydrogen are halogenated at the α-position on treatment with chlorine or bromine in the presence of small amount of red phosphorus to give α-halocarboxylic acids. The reaction is known as Hell-Volhard-Zelinsky reaction.

What happens when α-Bromopropionic acid undergo substitution reaction with a base? 

Lactic acid 

The correct answer is option 2. Lactic acid

α-Bromopropionic acid undergo substitution reaction with a base to produce α-Hydroxypropionic acid, i.e., Lactic acid.