Final answer:
Palm trees, which are monocots, increase in diameter by producing additional vascular bundles, facilitated by their primary and secondary thickening meristems.
Step-by-step explanation:
Palm trees, which are part of the monocot group, show an increase in diameter each year not through lateral meristems like dicots, but by producing additional vascular bundles. Unlike dicots, which have vascular tissues arranged in a ring, monocots have their vascular bundles randomly scattered throughout the ground tissue. The reason palm trees can increase in diameter is due to the ability of their primary and secondary thickening meristems to produce more vascular and parenchyma tissues.
Therefore, the correct answer to the question is: B: Vascular bundles.