Final answer:
In the intermediate host of Echinococcus granulosus, cyst formation occurs when the ingested larvae reach the organs and develop into hydatid cysts.
Step-by-step explanation:
In the intermediate host of the Echinococcus granulosus life cycle, what occurs is D. Cyst formation. When intermediate hosts such as sheep, pigs, goats, or cattle ingest the eggs of E. granulosus, the eggs hatch in the animal's intestines releasing larvae. These larvae then penetrate the intestinal wall and enter the bloodstream, where they travel to organs like the lungs and liver. There, they form hydatid cysts, which are fluid-filled sacs where tapeworm heads develop. These cysts grow slowly and can go undetected for a long time.
Ultimately, if an infected organ is ingested by a definitive host like a dog, the life cycle is completed as the tapeworm heads attach to the dog's intestinal wall and mature into adult worms.