The central problems of an economy are the fundamental choices every economy must make because resources are scarce relative to unlimited wants — namely what to produce, how to produce, and for whom to produce — together with efficient use of resources and provision for growth.

The problems, one by one

1. What to produce (and in what quantity) — which goods and services, and how much of each. Choosing more of one means less of another (an opportunity cost, shown by the Production Possibility Curve).
2. How to produce — which technique to use: labour-intensive or capital-intensive? The choice depends on factor availability and relative prices, aiming for least-cost production.
3. For whom to produce — how the output is distributed among people, i.e. the problem of distribution of national income.

The two further problems

4. Efficient use of resources — are resources being fully and best utilised (no waste, no unemployment of resources)? …