Answer : The correct answer is -
C. In vitro observation.
In vitro observation or study can be described as experimental technique or procedure, which is done outside the living system with controlled environmental conditions.
As per the given information in the question, a protein is separated from all other components of a yeast cell, and a small molecule that could bind to the isolated protein is searched by the scientist.
As this study is going on outside the yeast cell, therefore, it is an example of invitro observation.