1 – Correct
The line “The most valuable kind of praise is that which the recipient knows to be appropriate.” suggests that the recipient is able to assess which kind of praise is appropriate and deserved and which praise is not.
2 – Correct
The line “Praise should only be given to the extent that it is deserved” suggests that the person giving the praise can also assess whether a praise is deserved or not.
3 – Wrong
This is neither implied nor assumed by the text. The paragraph does not mention anything about any duty.
4 – Wrong
The text does not say that self esteem benefits anyone. Hence this is irrelevant.
Statements 1 and 2 are correct. So A is the answer.