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Create a cozy Mediterranean-themed living room featuring a warm color palette of terracotta, sandy beige, and deep blue accents. Include a rustic wooden coffee table in the center, surrounded by plush, oversized sofas adorned with patterned throw pillows. The walls should be painted in a soft cream color, with a large archway leading to an outdoor terrace adorned with potted olive trees and colorful flowers. Add details such as a beautifully woven area rug, clay pottery on display, a wrought-iron chandelier overhead, and large windows with flowing sheer curtains that let in abundant natural light.