Option 1 -> Incorrect elasticity value.
Option 2 -> Incorrect elasticity value.
Option 3 -> Correct elasticity value calculated from the given data.
Option 4 -> Incorrect elasticity value.
Hence, Option 3: e=2 -> Price elasticity of demand (e) = (% change in quantity demanded) / (% change in price). Here, quantity falls from 125 to 75 units, so change = -50 units. Percentage change in quantity = (-50/125) × 100 = -40%. Price rises by 20%. Therefore, e = -40%/20% = -2. Taking absolute value, e = 2, indicating elastic demand where quantity demanded changes proportionately more than price change -> correct