There are $\binom{n}{2}=\frac{n(n-1)}{2}$ pairs of distinct points to be connected to form an edge. If self loops and multiple edges between two vertices are not allowed , each of these pair determines one possible edge, and any subset of those possible edges for a distinct graph (the vertex set is fixed here and only by changing the edge set we form a distinct graph as $G=(V,E)$. A set with $\binom{n}{2}$ elements has $2^{\binom{n}{2}}$ subsets, so there are $2^{\binom{n}{2}}$ possible simple graphs.
$\therefore$ The number of possible simple graphs with $3$ labelled vertices $=2^{\frac{3\cdot2}{2}} = 2^{3} = 8$.
Now, this also includes disconnected graphs. There is no closed form solution to find the number of connected graphs with $n$ labelled vertices. But we can easily enumerate this for $n=3$ as follows.
$\{\{a-b, b-c\}, \{a-c, b-c\}, \{a-b, a-c\}, \{a-b, b-c, a-c\}\}$
So, the correct answer is $4.$