Answer:
The correct option is 1 as the overflow error has occurred
Step-by-step explanation:
As the program uses 3 bits to represent integers thus the range of the maximum value that the program can store is given as

So when the two numbers in decimal base 10 are added as 3 and 5 the resultant is given as

This is more than what the 3 bit integer can store thus the overflow error has occurred.