Correct answer: (4) Alcohol is oxidized further in the presence of oxygen.

During industrial alcohol fermentation with budding yeast (Saccharomyces), oxygen is kept limited so that yeast switches from respiration to fermentative metabolism, maximizing ethanol production rather than fully oxidizing sugar to CO₂ and water.

Why option (4) is correct

• In the presence of abundant oxygen, yeast preferentially carries out aerobic respiration, in which pyruvate is completely oxidized in the TCA cycle and electron transport chain, yielding much more ATP per glucose and minimal ethanol.

• When oxygen is limited, yeast metabolism shifts to anaerobic fermentation, converting sugars into ethanol and CO₂; if oxygen is high, any produced ethanol can be further metabolized (oxidized) as a carbon source.

• Therefore, to prevent ethanol being further oxidized and to ensure high alcohol yield, oxygen is kept limited, matching statement (4).

Why the other options are wrong

• (1) Budding yeasts are obligate anaerobes and cannot tolerate oxygen.
  Saccharomyces cerevisiae is a facultative anaerobe: it grows in both the presence and absence of oxygen, using respiration when O₂ is available and fermentation when it is limited. This statement is false.

• (2) Budding yeasts lose mitochondria in the absence of oxygen.
  Yeasts retain mitochondria under anaerobic conditions; the organelles remain, although respiratory activity is downregulated. There is no routine “loss” of mitochondria due to lack of oxygen, so this is incorrect.

• (3) Budding yeasts are facultative anaerobes.
  This statement is true biologically, but it does not answer the “why oxygen supply is kept limited” part. Being facultative anaerobes explains their capability, not the process condition used to maximize alcohol. Hence it is not the best direct reason and is not the correct option here.