Final answer:
The difference between a Pyramid Scheme and an MLM company is that a Pyramid Scheme does not sell a legitimate product and earns money mostly through recruitment, while an MLM sells products and also allows earnings from sales made by recruits.
Step-by-step explanation:
The difference between a Pyramid Scheme and a Multi-Level Marketing (MLM) company is primarily in their business models and legality. Option (b) correctly states that a pyramid scheme does not typically involve the sale of a legitimate product or service, whereas a legitimate MLM company does sell a product or service. Pyramid schemes rely on the recruitment of members at different levels, where the income of those at the top is generated primarily from entrance fees or investments made by recruits, rather than through selling a particular product. This makes them unsustainable and illegal in many jurisdictions.
Conversely, MLM companies operate on a model where participants earn money by selling products directly to consumers and by earning a percentage of the sales made by other members they have recruited, which can be a legal business practice if structured properly. It is the presence of a legitimate product and the primary source of revenue coming from product sales, not recruitment, that differentiates an MLM from an illegal pyramid scheme.