What does a volume-to-capacity (v/c) ratio greater than 1.0 indicate for a roadway segment?

1. The roadway is operating well below capacity with free-flow conditions
2. The roadway demand exceeds its capacity, resulting in oversaturated conditions, queuing, and excessive delay
3. The roadway has been recently constructed and is operating at design capacity
4. The roadway has exactly the right number of lanes for the traffic demand