Lord Capulet insults Tybalt when Tybalt tries to kick Romeo out of the party. First he calls him a boy and tells him to be a man.
Tybalt is an excitable young man who takes the family feud very seriously. He has a temper, and he gets very annoyed when he sees Romeo at the Capulet party. He thinks that a Montague at a Capulet ball is an insult.
Am I the master here, or you? Go to!
You'll not endure him? God shall mend my soul!
You'll make a mutiny among my guests!
You will set cock-a-hoop! you'll be the man!(Act 1, scene 5, p. 32)
This is an insult because Tybalt said he would not endure Romeo, and Capulet is telling him that he is in charge, not Tybalt.
The best insult Capulet gives is next. He calls Tybalt a saucy boy and a princox!
You are a saucy boy. Is't so, indeed?
This trick may chance to scathe you. I know what.
You must contrary me! Marry, 'tis time—(90)
Well said, my hearts!—You are a princox—go! (Act 1, Scene 5, p. 32)
Capulet basically tells Tybalt he will make him mind him. Capulet is more interested in keeping up appearances. He says that Romeo has a good reputation, and therefore they should just let the young man stay. Tybalt just wants to fight, but Capulet is able to control him. This scene is significant because it gives Tybalt a reason to get revenge on Romeo, since he made him look foolish.