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He reacts 'sharply' because he feels himself to be the butt of a private joke; the other two men seem to be making fun of him and acting in a condescending manner. He is embarrassed.
An Inspector Calls
Eric reacts 'sharply' as he is quick to defend himself against the joke between Gerald and Birling, he feels picked on, which is understandable as they appear to be joking at his expense. However eric overreacted as it was a mere joke, not aiming to offend, and they did not really mean that Eric could be in trouble with the police, as their previous joke which they referred to, was about business.