Fill in the blank using demonstrative adjective-
This house is better than ______.
a) This
b) That
c) Such
d) Both A and B

Hint: Read the given sentence carefully, try to find its core meaning, its subject, predicate, or object. We can clearly see that the speaker is comparing one house to another.

Complete answer:
In the given sentence, we have to compare two things. It is a comparative sentence. There are four given options, we have to choose the one which is the most suitable for all.
Now let us examine all the options to find out the correct option -
Option ‘a' is This. It cannot be the correct option because ‘this' and ‘this' means - a same thing and we cannot compare between the two same things.
Option ‘b' is That. It is the correct option because here “that” means a different house. And this house is nice in comparison to that house.
Option ‘c' is Such. It cannot be the correct option because it does not provide any meaning to the sentence.
Option ‘d' is Both A and B. It cannot be the correct option because option A is wrong so this option is automatically wrong.
As we have analyzed all the given options, we can easily figure out the correct option. Here, the correct word to be filled in is - that. Hence, option 'b' is the correct option.

Note:
All the other options are plausible distractions. 'Such' is used for minor things, and cannot be used in the given sentence.