Setting and mood are always some of the most important factors in a story. The setting is what mainly affects the mood of any story. For example, a dark hazy swamp in the middle of nowhere provides an ominous backdrop, which makes the reader feel insecure. Likewise, a sunny playground provides a warm and welcoming environment making a reader feel happy and cozy. Thus, setting can help set the stage for any story.

The author of "The Gift of the Magi," O' Henry uses setting and mood to a fair degree in the beginning of the story. His description of the flat shows the poor state of affairs of the family living there. He further goes on to qualify the couch as "shabby," which is a clever way to enhance the setting and create a dreary mood. The description of life being made of...