Location of ini config files in linux unix

Question

Two questions, really:

1. Is there a standard/convention regarding the placement on configuration files?

   For system or quasi-system programs they seem to usually be somewhere in /etc. It seems less clear for plain application programs or programs with insufficient privileges for /etc.

2. In processing program options is there a standard hierarchy of what takes precedence? E.g. does a command line option override an initialization file and/or an environment variable? Vice versa? Or is this entirely up to the developer?