Following are three central problems:

(i) What goods shall be produced and in what quantities? In an economy, resources are limited. These resources have also alternative uses. The decision, therefore, has to be taken how much and which of the alternative goods and services shall be produced. An economy cannot produce all the goods and services required and therefore, the decision has to be taken whether more food should be produced or more luxurious goods should be produced. Thus, choices will have to be made on the basis of priorities. The decision regarding the amount of more consumer goods or capital goods is largely affected by society's choice regarding future consumption as opposed to current consumption.

(ii) How shall goods be produced? This is the second fundamental problem about the organisation of production, that is, by whom and with what resources and in what technological manner are they to be produced ? A particular commodity may be produced in a variety of ways. The technology may be capital-intensive using large and automatic machines or labour-intensive in small or tiny scale as in cottage industries. A decision, therefore has to be taken about the scale and technique to production.

(iii) For whom shall goods be produced? is related to the distribution of national income in economies. The distribution among different people has to be decided.