An engine shutdown in flight is an essential element of a ME course.
I cannot condone the practice of using mixture to simulate (create!) an engine failure after take off. It is simply too risky.
Even if the conditions and aircraft perf state that an aircraft will climb on one with the anticipated load it is a bad idea to go there. For one, you are inviting in the exercise the student to swiftly operate the main engine controls in a state of high arousal.
He/she is quite entitled as a student to pull the wrong levers and then miss-handle the flying controls.
At 500ft?!?
You'd never get me to teach that way.
WWW