The answer is (b): the letters on the fuse box will appear smaller when the lens/fuse box system is immersed into water, as seen by comparing the original photograph, at the left, with the photograph at the right, in which the system is immersed.
When the lens is immersed in water it no longer attains its normal focal strength, because the medium in which it is immersed has an index of refraction nearly equal to that of the glass in the lens. Light rays no longer bend as much at the interfaces where they enter and exit the lens.
