Please see this thread: Gre big book test 1 section 1 question 4
Yeah, it should contrast “find merit”.
Connotation would tell you its something negative.
Semantics would tell you its something like “unmerited”
Here , we have [simplicity and homogeneity] _____ [variety]
These two clearly contrast so the blank itself needs to be a contrast word. “differentiated” implies a change which creates a contrast.
“differentiated” is a verb here, not a noun like “variety”.