You're correct that the zener 2 is not in zener mode.c) Determine the voltage to the extremes of the resistance of 500 Ohm when Vsupply = 5 V
The calculations don't seem correct. I would say that the voltage at the terminals of the 500 Ohm resistor is 0,7 V, since the diode is directly polarized (if vsupply is equal to 5 V considering the voltages drop across the circuit it is impossible for the diode z2 to be in zener mode) and therefore it has a 0,7 V voltage drop at the terminals.Since 500 Ohm resistor is in parallel with the zener it also has 0,7 V at its terminals.
But if the voltage is 0.7V, then wouldn't zener 1 also have a voltage of 0.7V?
In which direction do you get a voltage drop of 0.7V?
Is that the same direction as for the zener mode?