As secondary growth proceeds, in a dicot stem, the diameter

The correct option is B heartwood increases
In young trees and young parts of older trees, all of the wood in the stem is sapwood. But as the tree gets older and its trunk increases in diameter, things change.
The cells nearest the center of the trunk die, but they remain mostly intact. As these older sapwood cells age and die, they become heartwood.
So both sapwood and heartwood are produced but it is only the heartwood which increases in diameter as compared to sapwood. Sapwood width remains fairly constant.