Explanation

This question gives us a hint, as GMAT questions sometimes do, that you can ignore certain details or sophisticated considerations. Namely, the word "exactly" here is meant to indicate that you're really being asked whether one circle is the size of another circle. You don't need to worry about whether a small envelope of air need be present around the cover, or whether there is friction between the cover and the edge of the recessed area, because the fit is "exact." Let's move to the data statements, separately first.

Statement (1) gives the diameter of the circular recessed area. That defines one circle but not the other, so we can't compare them. Insufficient.

Statement (2) has the same problem: it defines only one circle, just the other one. Since the area and the circumference of a circle depend only on its radius, we can obtain its radius from either of these measurements. Insufficient.

Putting the statements together, we have a radius of each of the circles we need to compare. We have sufficient information to answer the question.

The correct answer is (C).