A liquid preparation which mixes fine droplets of an oil in water, such as castor oil, is called a(n) _________.

An emulsion is a mixture where fine droplets of one liquid are dispersed within another liquid that typically doesn't mix with it, such as oil in water. This process often requires an emulsifying agent to stabilize the mixture and prevent the two phases from separating. Castor oil mixed with water is a classic example of this phenomenon.

In contrast, a suspension consists of solid particles dispersed in a liquid, which can settle over time if not mixed. A solution refers to a homogeneous mixture where one substance is completely dissolved in another, like salt in water; here, there is no distinct separation of phases. A gel is a semi-solid, jelly-like substance that typically consists of a liquid trapped within a solid network, which is a different form of matter altogether. Thus, the essential characteristic of an emulsion is its ability to maintain fine droplets of one liquid dispersed within another, making it the correct answer.