It's totally unserious to ask a candidate to negotiate against himself by providing a ceiling. As the candidate, just say $1M/year and move on to the next employer. If they're not asking a serious question they should not expect a serious answer.

You could say the same for candidates.

Normally I would agree, but they obviously already have a budget planned for this role as they turned candidates down for being "outside of budget", so I assume they are aware of the range a market salary should be in.