In this course it's not accepted because
1) It is not natural in standard Ukrainian
Using "є" is obsolete in modern Ukrainian and sounds unnatural. It is pretty common in some regions of Ukraine though, but not in the "textbook" Ukrainian.
2) Copying the structure of the English sentence
The idea is, if a learner actually does not speak any Ukrainian, they might write "є" simply because they are copying the structure of the English sentence. The developers of this course think that the users should learn that it's unnatural, even though it's technically not wrong grammatically. And if the users do actually speak some Ukrainian with the variation/dialect where "є" is natural (e.g. some Western Ukraine regions, Canadian born Ukrainians), they can understand that this course is also for people who don't speak Ukrainian at all and just go along with it, speaking the way they want at home, and following the "textbook rules" here :)
The Tips and Notes state that the interchange "y" is used when the previous word ends in a consonant, and "B" is used when the previous word ends in a vowel. Here we have тато ending in a vowel, but the interchange "у".
This is not a rule but a "style guideline" or a suggestion for melodic sound. You can use either "вчителька" or "учителька" here and both will be accepted, and both are correct.
I would agree that it would have been better to put the version with "в" as the default, to demonstrate the "melodic sound" guideline (and still accept "у" of course, but not display it). Apparently the people who created the exercises did not give it much importance. Right now the exercise cannot be changed.