Muddy likes to be called Yellow because thats the color of her favorite comfort object, a yellow highlighter that has long since gone dry. After failing another test as a filly, her teacher made her wear the dunce cap, which Muddy misinterpreted as a reward and wore it proudly until a fellow classmate told her what the word "dunce" meant, after which she tried to cross out the word with her yellow highlighter, which only made the problem worse.
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