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As the Jarl's court wizard, Farengar is expected to lend magical assistance during times of peril. In the meantime, he is permitted to pursue a long-running research project concerning dragons. No apparent progress is made even after the player produces an artifact for him from Bleak Falls Barrow. However, once a dragon is captured in the Great Porch (near the end of the main questline), he will interact with the dragon and find himself quite unwelcome to attempt any physical research.
When asked about his place in Dragonreach and his function, he can be quite condescending and irritable.