Concept:
Reynolds number ($Re$) is used to determine the type of flow in a pipe.
Step 1: Definition of Reynolds number.
\[
Re = \frac{\rho v D}{\mu}
\]
Step 2: Flow regimes.
Laminar flow: $Re<2000$
Transitional flow: $2000<Re<4000$
Turbulent flow: $Re>4000$
Step 3: Evaluating the options.
500 $\rightarrow$ Too low (incorrect)
1000 $\rightarrow$ Possible but not standard limit (incorrect)
2000 $\rightarrow$ Standard upper limit for laminar flow (correct)
4000 $\rightarrow$ Turbulent range (incorrect)
Step 4: Conclusion.
Thus, laminar flow occurs when Reynolds number is less than 2000.