We are tasked with finding the set difference \( A - B \), where:
\[ A = \{1, 2, 3, 4, 5\} \quad \text{and} \quad B = \{4, 5, 6, 7\}. \]
Step 1: Recall the definition of set difference.
The set difference \( A - B \) is the set of elements that belong to \( A \) but do not belong to \( B \). Mathematically:
\[ A - B = \{x \mid x \in A \text{ and } x \notin B\}. \]
Step 2: Identify the elements in \( A \) that are not in \( B \).
The elements of \( A \) are \( \{1, 2, 3, 4, 5\} \), and the elements of \( B \) are \( \{4, 5, 6, 7\} \). The elements \( 4 \) and \( 5 \) are common to both sets, so they are excluded from \( A - B \).
The remaining elements in \( A \) are \( \{1, 2, 3\} \).
Step 3: Write the result.
\[ A - B = \{1, 2, 3\}. \]
Final Answer: The set difference \( A - B \) is \( \mathbf{\{1, 2, 3\}} \), which corresponds to option \( \mathbf{(3)} \).