I'd have said ON - maybe even 'perched on'. (This is a retraction of my earlier post, when I said in was more probable, but on was possible; in my view, the picture makes it one of those 'possible' cases.)
I was also thinking about the same thing. I just hope the teacher could give a more concise perspective on this one in the future.
Originally Posted by Casiopea
Wow, that's a really tough call. The bird's feet could be either in the nest or on the rim of the nest. Hmm. Well, given we can't see the bird's feet, I'd have to side with the teacher on this one. "The bird's in the nest", at least its feet are.