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“ license allocation for new users MUST be assigned automatically based on the location of the user”
That implies more than ONE dynamic group and the answer "a Dynamic User security group" doesn't meet that requirement. Multiple dynamic groups would.
"The helpdesk administrators must be able to manage licenses for ONLY the users in their respective office".
An AU meets that requirement, then you could now create multiple dynamic groups to support the first license requirement.
You cannot assign licenses to an Administrative Unit, only a Group, see here https://learn.microsoft.com/en-us/answers/questions/955831/can-licenses-be-directly-assigned-to-an-administra.html
B must be the correct answer