The problem of excess demand is generally seen in:

Price ceiling

The correct answer is Option 1: Price ceiling

Price Ceiling is a government-imposed maximum price that is set below the equilibrium price. Since the price is artificially kept low, the quantity demanded increases while the quantity supplied decreases, leading to excess demand and shortages.

Price Floor is a government-imposed minimum price set above the equilibrium price. This leads to excess supply, not excess demand, as producers are willing to supply more than what consumers are willing to buy at that higher price.