2 Attachment(s)

Explain solution to probability problem 2

I have attached two images(Question and the answer to the question) that i got from my uni's past exam papers and i wasn't sure how to answer to the question part c. I can do the calculation part in part c but I wasnt sure how to answer to the question where it says " Assuming that the model in (b) above is the correct model, is this estimate better or worse one than the estimate calculated in (b)? explain how it is better or worse?" . The answer is given already, and i couldnt calculate the Variance. please help!!