Final answer:
Adam Smith's three natural laws of economics are the law of self-interest, driving individuals to act for personal gain; the law of competition, fostering innovation and fair pricing; and the law of supply and demand, controlling prices and resource allocation.
Step-by-step explanation:
Adam Smith's three natural laws of economics include the law of self-interest, the law of competition, and the law of supply and demand. The law of self-interest posits that individuals work for their own good, which in turn leads to the production of goods and services that benefit society.
For instance, a baker bakes bread primarily to make money, not out of altruism, but this activity fulfills the community's need for bread. The law of competition drives innovation and keeps prices down; for example, two tech companies may compete to provide better smartphones, leading to technological advancements and fair pricing. Lastly, the law of supply and demand regulates prices and the allocation of resources, as seen in the housing market where the scarcity of homes in desirable locations drives up prices.