That's a very confusing diagram, because the letter 'P', which the stem suggests is the name of the circle, appears to be used in the diagram to label the center of the circle. The same letter cannot be used for both of those things, and if I read the question alone before reading the first half of the stem, I'd wonder if the question was asking about the area of that tiny circle in the middle of the diagram.
In any case, if the rectangle has an area of 100, it might be a square, in which case the circle won't be too big (it will have a diameter of 10√2), or it might be some very long and thin rectangle, say a 0.01 by 10,000 rectangle, in which case the circle will need to have a diameter slightly greater than 10,000 in order to inscribe the rectangle. So using Statement 1 alone we can't say much about the circle's area, and Statement 2 alone is clearly insufficient with no information about how big anything is. Combining the statements, we know we have a square and we know how big that square is, and thus can find how long its diagonal is, and that diagonal is the circle's diameter. So we can find the radius and thus the area of the circle, and the answer is C.
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