3 1/2 is smaller. To find out the answer to this type of problem, you want the denominators of both of your fractions to be the same. You do this by finding the least common multiple. In this case, you want to get from 2 to 8, and to do this, you would multiply both the top and bottom of the fraction 1/2 by 4. 1x4=4 and 2x4=8, so your new fraction becomes 4/8. you don't need to change the 3s into improper fractions because they are the same number.
4/8 is less than 7/8, so 3 4/8 is also less than 3 7/8, meaning 3 1/2 is less than 3 7/8 because 3 4/8 and 3 1/2 are equivalent or have the same value