1. one
2. two
3. three
4. four
5. five

3 is CORRECT. When the counter transits between 0111 and 1000, four flip flops change: first QA, then QB, QC, and QD. The flip-flop changes just described correspond to the intermediate (transient) states 0110, 0100, and 0000. When QD changes, count state 1000 is entered. Here is the completed state graph:

      (0111)  State 7
          |
          V 
      (0110)  transient state #1 
         | 
         V 
      (0100)  transient state #2 
        | 
        V 
      (0000)  transient state #3 
       | 
       V 
      (1000)  State 8

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