Answer is B.
How did benzene ring form ?
isn't the carbonyl oxygen more nucleophilic ?
I mean shouldn't the carbonyl oxygen attack AlCl3 ?
This is a common mechanism. Many questions had come from this reaction, so I don't know the proper reason.
Both of these oxygen will attack , but when cabonyl oxygen attacks then no proper product will be formed and hence reaction will stop , and on the other hand when the conjugated O attacks a product is formed and hence reaction shifts in forward direction and this reaction only yields the final product