Dear student,
Main scale reading=1mm=1/10cm=0.1cm
Circular scale reading=27div
Least count=0.01mm=0.001cm
We know,
(i) Observed diameter=main scale reading+circular scale reading×least count
Observed diameter=0.1+(27×0.001)=0.127cm
(ii) Correct diameter=observed diameter-zero error
Correct diameter=0.127-(+0.005)=0.122cm
Regards