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Part of the structure of micro economy is the behaviour of households as one of the economic agents. Alongside firms (producers), their decisions and actions are among the most significant features of the circular flow of income model. Central to the model is the consumption by those households of goods and services, and the supply of labour to firms in order for them to function and produce outputs. Households also receive income from a variety of sources, utilising their income in a number of ways as shown later. Consumer expenditure also takes place to complete the flow such as day to day living expenses, savings (for example in the form of asset purchase or pension contributions) and finally in the form of taxes...
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