Option 1 -> Increased Supply: Incorrect. Lower prices discourage producers, leading to decreased supply, not increased.
Option 2 -> Constant Demand: Incorrect. Demand doesn't remain constant; quantity demanded increases at lower prices.
Option 3 -> Excess Demand: Correct. Price ceiling below equilibrium creates a shortage where quantity demanded exceeds quantity supplied.
Option 4 -> Decreased Demand: Incorrect. Lower prices increase quantity demanded, not decrease it.
Hence, Option 3: Excess Demand -> When government sets a maximum price (price ceiling) below the market equilibrium price, it creates a shortage situation. At this artificially low price, consumers want to buy more products (higher quantity demanded) but producers are willing to supply less (lower quantity supplied). This mismatch results in excess demand or a shortage, where the quantity demanded exceeds the quantity supplied. This is a classic market distortion caused by price controls. -> correct