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For example, see the following reference:

Denison was interested, went over to him, and watched the swift, skilful manner in which the thin brown fingers worked.

"Where are you going to fish?" he inquired.

The broad, flat face lit up. "Outside in the dam deep water--sixty, eighty fa'am."

Can I also use "he asked" here? Where are the places I cannot use ask instead of inquire?

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It may also help to be aware that, depending on your location, inquire may be less appropriate than enquire for your example. In Australia, an inquiry is more of a formal investigation than an enquiry, which is simply asking a question. I believe there is no difference between the two in American English, but I'm not sure about British English. – Amos M. Carpenter Apr 27 '12 at 5:52
up vote 11 down vote accepted

You can ask that someone perform an action.
When you inquire you only request information.
You can ask for permission, a favour, or forgiveness, but not inquire for them.
They're not interchangeable, ask is broader.

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In the most basic form, ask can be applied to any question and the response may be completely ignored if not required. Inquire, on the other hand, implies an eagerness on the part of the former to receive a response.

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In American and Australian English, they are interchangeable, but an inquiry would be a more formal investigation.

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See my comment to the question; in Australian English, "enquire" would be interchangeable with "ask" only in some circumstances (see @donothingsuccessfully's answer), "inquire" would be even less interchangeable if you will. – Amos M. Carpenter Apr 27 '12 at 12:21

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