To simply create the file, use command
touch /path/to/file. But you have to be sure that this path exists and you have write permissions into that directory.
Now, you choose
/mnt/cdrom as path to file. This is obsolete path to CD-ROM. Since it was created manually (probably with
sudo prefix), it allows writing there only to the root user. Correct path is
/media/cdrom. And even if it was mounted, you would have no write permissions into that directory, because it is a CD-Read Only Memory. The only way you can write files directly onto CD filesystem is using DVD+R/DVD+RW disks.
So, the right command in your case would be such:
dd if=/dev/zero of=~/usbfile.bin bs=1024 count=1048576
Then burn this file on DVD. I still have no idea why do you need this wasting of DVD, but if you want to do this, it is the right way.