C. 0.0335 mm to 0.0345 mm
Explanation:
The least significant digit of Craig's measurement is in the 0.001 mm place. The error in the measurement is presumed to fall within half that value either side of Craig's measurement. So, the actual value is expected to be in the range ...
0.034 - 0.0005 = 0.0335
to
0.034 + 0.0005 = 0.0345
The measurement is presumed to be in the range 0.0335 mm to 0.0345 mm.