Their holy book says God is all-merciful, so they assume that this universe must result in greatest possible good.
Hmm, that's a challenging one.
The only way I could personally approach that is by using a similar argument to Darkmatter in the vid I posted.
If you look at the overall purpose of human existence as presented in Islamic and Christian theology it's basically this;
1) An omnibenevolent, omniscient, and omnipotent diety chose to create the universe.
2a)The deity created man with free will, but wanted man to exercise that free will spending life worshipping him.
2b) The Deity created heaven and hell for man.
3) On earth every human being suffers psychologically and physically throughout their lives, regardless of their age or moral character.
4) On judgement day the omnibenevolent deity will chose to forgive some human beings for the wrong choices they made, and send them to heaven where they will be in bliss for eternity.
5) On judgement day God will chose to not forgive large numbers of human beings, and then will torture them for eternity.
How is that congruent with omnibenevolence, seeing as the the deity - also possessing omniscience - brought them into existence out of choice? (The choice to create human beings negates the limitations of omnipotence argument)
Why would an ominibenevolent deity chose not to forgive some human beings - as presented in Islamic and Christian theology - regarding judgement day?
Put more concisely; How can anyone rationally believe that a deity possessing omniscience and omnibenevolence would willing inflict eternal suffering on human beings, when he could have chosen not to?