It looks like the answer part in Matching type problems is not able to render LaTex.

When I looked into this, the issue is that to render the dropdown, moodle is using a select-option tag in HTML and the option tag doesn't allow any other tags inside it. So MathJax is not able to render the LaTex inside the dropdown. 

I created a custom dropdown using bootstrap and JavaScript. Then I made the original dropdown hidden and synchronized the custom dropdown with the original dropdown. Hence I was able to render the LaTex inside it.

I tested and it was working properly both for students and teachers. The teacher was able to grade properly.

Is this solution acceptable?