
Here is the same result worked through percentages instead of decimal fractions, which some students find easier to follow.
The strain gauge starts at $120\ \Omega$ and its resistance changes by $0.5\ \Omega$ during the test. As a percentage, that change is $\dfrac{0.5}{120} \times 100 = 0.4167\%$.
The gauge factor tells us how many times bigger the percentage resistance change is compared to the percentage strain: $GF = \dfrac{\%\Delta R}{\%\varepsilon}$. Rearranging, the percentage strain is $\%\varepsilon = \dfrac{\%\Delta R}{GF} = \dfrac{0.4167}{2.0} = 0.2083\%$.
This percentage strain means the sample shortens by $0.2083\%$ of its original length. The figure gives the original gauge length as $110\ \text{mm}$, so the deformation is $\Delta L = \dfrac{0.2083}{100} \times 110 = 0.2292\ \text{mm}$, which rounds to $0.23\ \text{mm}$.
Let's summarize:
So the sample deforms by about 0.23 mm under the compressive load.