The word "prime" is a quality grade given by the U.S. Department of Agriculture to describe the highest quality beef and other meats (veal and lamb) in terms of tenderness, juiciness and flavor.
This meat quality grade is given based on a combination of marbling and maturity. Marbling (or flecks of fat within the meat) adds flavor, and younger beef produces the most tender meat.
Therefore, the "prime" grade will be given to meat that comes from the youngest beef with the most abundant marbling.
Prime Meat: The Highest Quality
Less than two percent of all beef produced in the United States will earn the prime designation. You will probably never see prime meat for sale at the grocery store; rather, it tends to be purchased by high-end restaurants and hotels.
Because of its superior quality, prime cuts of beef are best prepared using dry-heat cooking methods such as roasting and grilling.
The "USDA Prime" Grade
Finally, cuts of meat that have been given a prime grade will be marked with a purple stamp showing the words "USDA Prime" inside a shield symbol. While this mark will only be visible on the primal cuts, the retail packaging will feature the grade mark.
It is illegal to misrepresent the grade of meat or the shield symbol, or to use misleading language to describe the quality of the meat. For instance, a restaurant that serves something called prime rib must use beef that has been graded prime.
Otherwise, they would have to call it a "rib roast" or something else that doesn't have the word "prime" in it.
Note that meat grading is entirely optional, and meat producers who request a quality grade for their meat must pay for the service. This differs from the system of meat inspection, which is required by law, but is not concerned with quality or tenderness.
Also performed by the USDA (and paid for with tax dollars), meat inspection ensures that the meat you buy is wholesome, safe and has been properly packaged and labeled.