Concept:
In Young's double slit experiment, fringe width is given by
\[
\beta=\frac{\lambda D}{d}
\]
where
\(\lambda\) = wavelength,
\(D\) = distance of screen,
\(d\) = slit separation.
Step 1: Convert all quantities into SI units.
\[
\lambda=500\times10^{-9}\,m
\]
\[
D=1.6\,m
\]
\[
d=2\times10^{-3}\,m
\]
Step 2: Apply fringe width formula.
\[
\beta=
\frac{500\times10^{-9}\times1.6}
{2\times10^{-3}}
\]
\[
=
4\times10^{-4}\,m
\]
Step 3: Convert into millimetres.
\[
4\times10^{-4}\,m
=
0.4\,mm
\]
Step 4: Final answer.
\[
\boxed{0.4\,mm}
\]
Hence,
\[
\boxed{(B)}
\]