Optical gauge work on the principle of interference of light rays.

When two light waves interact with each other, the wave effect leads to a phenomenon called interference of light.  Instruments designed to measure interference are known as interferometers. Application of interference is important in metrology like in optical gauge, optical profile meter.

Conditions for interference of light waves :

1.Light sources should be coherent, amplitudes and intensities must also be nearly equal to produce sufficient contrast between maxima and minima.

2. The sources must be monochromatic and in the same state of polarization

3. The source must be small enough that it can be considered a point source of light

4. The distance of the source, screen and interfering sources must adjusted to produce wide fringes.

Example of interference : Soap bubbles, floating film of oil on water and colors generated by incandescent bulbs.

Hence, the correct option is (C).