Step 1: Calculate the output using the given sensitivity.
The output voltage is
\[
V_o
=
(\text{Sensitivity})\times(\text{Excitation Voltage})\times(\text{Displacement}).
\]
Given,
\[
\text{Sensitivity}=5\ \frac{\text{mV}}{\text{V}\cdot\text{mm}},
\]
\[
\text{Excitation}=10\ \text{V},
\]
\[
\text{Displacement}=2\ \text{mm}.
\]
Step 2: Substitute the values.
\[
V_o
=
5\times10\times2
=
100\ \text{mV}.
\]
Hence,
\[
\boxed{100\ \text{mV}}
\]
Therefore,
\[
\boxed{(B)}
\]
is the correct answer.