The type of irony used in "The Boy Who Cried Wolf" is situational irony. The correct example that matches this type of irony is:
Situational irony: The villagers know all along that the boy is lying, but they come to save the sheep anyway.
This reflects the unexpected outcome where, despite knowing he is not being truthful, the villagers do initially respond to his cries, but when he finally tells the truth, they do not believe him.