Final answer:
Adam Smith's theory known as 'the invisible hand' suggests that individual self-interested actions lead to positive outcomes for the whole society, and this theory is a cornerstone of laissez-faire economics.
Step-by-step explanation:
Adam Smith's theory that maintains many individual economic transactions come together to create a greater good for all is known as the invisible hand.
In his seminal work, The Wealth of Nations, Smith explains that by pursuing their own self-interest and working for personal profit, individuals inadvertently contribute to the economic well-being of society.
The actions driven by personal gain lead to the production of goods and services that are most needed by society, guided by what Smith described as the invisible hand - an unseen force that helps maintain the balance of supply and demand in a free market.
Smith's theory supported the concept of laissez-faire economics, where the government's role in the economy is minimized, allowing the invisible hand to operate freely.
This foundation of classical economics rests on the rational choice theory, which assumes that individuals make decisions that are rational and that achieve their objectives efficiently.
The correct answer to the question is: a. The invisible hand.