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Premise:
1) Innovation in bike is limited by consumer demand.
2) The only cyclists seriously interested in innovation and willing to pay for it are bicycle racers.

Conclusion:
Innovation in bicycle technology is limited by what authorities will accept as standard for purposes of competition in bicycle races.

Logic chains:
1) Innovation in bike --> limited by consumer demand (A --> B)
2) Consumers who demand and pay for innovations --> bike racers (B--> C)
3) Innovation in bike --> limited by standard set by authorities for bike races (A --> D)

If you connect the dots, the assumption has to be C --> D, which is "Bike racers --> standard set by authorities for bike races."

Now check all the answer choices for the one that is the closest to C --> D.

C) Bicycle racers do not generate a strong demand for innovations that fall outside what is officially recognized as standard for purposes of competition.

C) fits the bill.

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