The formula for the area of a circle is:

$\text{Area} = \pi * \text{(Radius)}^{2}$

The radius is the distance from the center of the circle to the edge:
In this problem we have been given the diameter of the circle. The diameter is the distance from one edge of the circle to the opposite edge:
The diameter of a circle is always twice as long as the radius
In this problem, the diameter of the circle is $7$
$\text{Radius} = \dfrac{\text{Diameter}}{\text{2}}$
$\text{Radius} = \dfrac{7}{2}$
$\text{Radius} = 3.5$
To find the area of the circle, square the radius:
$\left(3.5\right)^{2} = 12.25$
Now multiply by $\pi$. The number $\pi$ is approximately equal to 3.14.
$\text{Area} = \pi * \text{(Radius)}^{2}$
$\text{Area} = 3.14 * 12.25$
$\text{Area} = 38.47$