The correct answer is Both 1 and 2.

• The Dharmasutras and Dharmashastras also contained rules about the ideal “occupations” of the four categories or varnas.
• Caste hierarchy is according to the occupation. Hence, Statement 2 is correct.
• Brahmanas were supposed to study and teach the Vedas, perform sacrifices and get sacrifices performed, and give and receive gifts.
• Kshatriyas were to engage in warfare, protect people, and administer justice, study the Vedas, get sacrifices performed, and make gifts.
• The last three “occupations” were also assigned to the Vaishyas, who were in addition expected to engage in agriculture, pastoralism, and trade.
• Shudras were assigned only one occupation of serving the three “higher” varnas. Hence, Statement 1 is correct.
• There were rules related to
  • marriage
  • worship
  • occupation
  • inter-dining
• The Brahmanas evolved two or three strategies for enforcing these norms.
  • To assert that the varna order was of divine origin.
  • They advised kings to ensure that these norms were followed within their kingdoms.
  • They attempted to persuade people that their status was determined by birth. 
• Prescriptions were often reinforced by stories told in the Mahabharata and other texts.