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Act II presents rising action and complications in the play, as well as important character development. In Act II, Eliza goes to Higgins' house to ask him to teach her to speak more properly. As she is presenting herself to him as a student, Pickering reminds Higgins' of his claim the previous night -- that he could pass Eliza off as a duchess at the Ambassador's garden party. Intrigued by the challenge, Higgins embraces Pickering's bet (the cost of the experiment) to prove that Higgins is the greatest teacher alive. Mrs. Pearce, Higgins' housekeeper, confronts Higgins about the problems with this experiment, namely how the girl is to be kept in the house and what will happen to her after the experiment is done. Higgins dismisses this questions and proceeds to order Mrs. Pearce to clean Eliza and order her new clothes (burning the old ones). Eliza protests at first, but is won over by promises of taxi rides and chocolates.

While Mrs. Pearce is taking care of Eliza, Alfred Doolittle (Eliza's father) comes to confront Higgins about his intent with Eliza. It quickly becomes clear that Doolittle only wants money. He and Higgins strike a deal of five pounds in exchange for Eliza. Doolittle is part of the lower class, and intends to stay there. He is a drunk, and assures Higgins that the five pounds will be used that weekend.

When Eliza returns, they are all shocked at the physical transformation that has already taken place. They also acknowledge that they have undertaken an enormous task.

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