@manored,
I generally find that the context makes the response. If there is some crazy musclebound biker with an uzi calling people stupid, I'd understand that it was only a matter of time before he did something dumb enough to get thrown in prison for twenty years, so there is no reason for me to initiate the response that sends him there.
Usually I divide the situation based on how much I value the person ,or if I am stuck with them. If i don't value them, and I am not stuck with them, I'll either make them think that I am stark raving mad, or just say things like "Oh my god, do you ever shut up?! I'm trying to get some sleep here!". If I do value them and I think that there is something I can say that will get through to them, then I say it. I always regret not responding to someone I value in a way that will reach them. If I don't value them and I am stuck with them and I can't avoid them, I crush them to the best of my ability. I will find out what will make them never bother me again (as long as it is not totally crazy or over the to, and it almost never is unless they have serious issues) and I do it.
Now, there is of course another situation I can think of: I don't value them, I am stuck with them, they have power over me. So for instance, a boss might fall under this category. Here you just ignore their stupidity and crack jokes about them with your coworkers.
There is really no limit to the various situations and possible responses.