The volume of the prism is the second option, 1/3 cubic inch. You can find this by first finding the volume of the cube, which is 1/216 because you would need to do 1/6 × 1/6 × 1/6.
Then you need to find the volume of the prism in terms of the cubes, so you would do 12 × 3 × 2 = 72.
Then, you simply multiply 72 by 1/216, which is 72/216, which simplifies down to 1/3.
I hope this helps!