Nature's first green is gold, her hardest hue to hold...
Setting - Home Town
In the story, the Socs and Greasers are in two separate cliques, two different groups. This doesn't just divide them, it creates a conflict that changes the story. We see this in many parts of the story, for example: on page 10 when Ponyboy is jumped it creates the element of tension - and on page 54 when Johnny stabs Bob, these conflicts force Pony to become tougher, and on page 80 both Pony and Johnny need to hide in the church. This creates a sense of tension and makes it so Johnny and Pony have to learn to survive on their own.
Johnny is a character that influences Ponyboy in many ways, shaping how Pony thinks and acts. One example of this is on page 59 when Johnny protects Ponyboy by stabbing Bob. This obviously helps Pony become a tougher character, forcing him to hide in a church, this obviously forces Ponyboy to go out of his comfort zone- And on page 77 Johnny recites the poem "when gold turns to grey," this teaches Pony a valuable lesson, affecting him as a character as well, providing insight and changing Pony's POV by showing the harsh reality to life.
The Outsiders takes place in one town, this town is very important because it impacts the story. One example of this is that because they live on the east coast, they're forced to be greasers. The first thing we learn (page 10) about Pony is that he is a greaser, and we know that Greasers live on the east side. This shows how setting impacts the characters since Ponyboys would not be a greaser if he lived on the west side like the Socs do. This shows how setting impacts Ponyboy.