Neither of these questions are answered. I think the idea was to film an old-fashioned fairy tale type of story, where these kinds of details are moot. How the story ends is more important than how it began.
But, all that said, here's what I figure.
1: We don't know how big the kingdom is. We only see one village and the king's castle. It's likely that the kingdom is much larger. Recall the lottery scene and the number of tiles in the bucket; there were hundreds. To me, the greater question here is the virgin requirement. How is that enforced exactly? And how does the dragon know a girl is a virgin or not, after it fries her with it's breath? Does it care? What's to prevent a parent from having his/her just come of age daughter go knock boots with the stable boy, so that she wouldn't be a virgin anymore?
2: Presumably yes; the king spoke to the dragon, or had someone else carry the message saying the would leave the dragon alone and provide two girls a year for it to have if it wouldn't burn their crops and trash the countryside. Dragon's have frequently been portrayed as intelligent creatures who can understand human language, and even speak it (think Smaug from The Hobbit, or Strabo from the Landover series). This deal apparently works nicely for Vermithrax; as described by Ulrich, she's OLD. Old, in constant discomfort, and probably perfectly happy to have take out delivered to her rather than having to go get it.
Whores will have their trinkets.
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