In chapters 3 and 4 Tolkien uses prose and poetry, do you think this is effective and why?

Use of prose in Chapter Three, and yes, his use of prose is effective.

"Names and sounds are important in The Hobbit and Tolkien put great care into the phonics of Middle Earth (He was, after all, a master linguist, classicist and philologist). The dragon, "Smaug," pre-dates our word "smog" but considering the visual similarity between the two (smoke and smoky pollution) it seems likely that Tolkien has extracted his name from the same source as our word. It is important that the elves' song erupts towards the end of the chapter because it produces a positive literary tone by making a euphonious and harmonic musical tone."