Different market decisions determine the functioning of an economy. Several different factors explain how markets make decisions and determine how they operate. The theory of markets mainly depends on supply and demand. However, it is essential to note that there is a difference between demand and supply and quantity demanded and supplied. A demand is how much the buyer plans to buy at different market prices and the quantity demanded is what the buyer actually buys at a particular price. Supply is the producer or seller's plan regarding the amount the seller will make available at different market prices and quantity supplied is the actual amount the seller will make available at a particular market price. It is important to differentiate between supply/demand and quantity supplied/demanded and not assume that they are the same thing. A surplus occurs when the quantity supplied is greater than the quantity demanded at a specified price. A shortage occurs when the quantity demanded exceeds the quantity supplied at a specific price. All of these key terms play an important role in the theory of markets and how markets make decisions. The characteristics of a market can be observed in real-life situations: laboratory methods for sex selection, the ability to buy wine online, shortage of iPhone 4S, surplus chicken for farmers and gluten-free grocery stores, everything this will be discussed in the next paragraphs. Demand is an essential factor in a market system; If there is a demand, a producer will fulfill a buyer's request and both parties are satisfied. The buyer gets what he wants and the supplier makes a profit. More recently, there has been an increase in demand to choose the sex of a child before pregnancy and people are happy...... middle of paper ......line-WSJ.com. The Wall Street Journal. Business News & Financial News - The Wall Street Journal - Wsj.com, October 15, 2011, accessed October 23, 2011, http://online.wsj.com/article/SB10001424052970203499704576624891779371806.html?mod=WSJ_LifeStyle_Lifestyle_5. Tomson, Bill, " As chicken prices rise for consumers, U.S. steps in to help farmers - WSJ.com." The Wall Street Journal. Business News and Financial News - The Wall Street Journal - Wsj. August 18, 2011, accessed November 5, 2011, http://online.wsj.com/article/SB10001424053111903596904576516560956498024.html?KEYWORDS=surplus.Troianovski, Anton, “Sprint Jumps Into iPhone Frenzy-WSJ.com.” The Wall Street Journal. Business News and Financial News - The Wall Street Journal - Wsj. October 15, 2011, accessed October 21, 2011, http://online.wsj.com/article/SB10001424052970204002304576629413133310144.html?KEYWORDS=iphone+4s.