Working with Product Catalog & Price List

If you don't set up your product catalog properly, yon't be able to add products to the opportunity. 

Product catalogs and product list are dependant data entities.
You should first create your price list. Then your products.

When creating a product list or a product they each need to reference a price list item.
The catalog also needs to reference the price list as a default. If you just click default list, there won't be a list to choose if that product isn't matched to a price list item.
To get a default list, click on the Price List Items nav link. Then select Add Price Item from the menu bar. Your product information will be auto filled for you.
Click on Price List and select the list.
Set the cost.
Save and Close.

Now you're back at the product page.
Select Default price list.