Running the app on a virtual device with system image, 'Google Play API' instead of 'Google API' will solve your issue smoothly..
Virtual devices Nexus 5x and Nexus 5 supports 'Google Play API' image.
Google Play API comes with Nougat 7.1.1 and O 8.0.
Just follow the below simple steps and make sure your pc is connected to internet.
Create a new virtual device by selecting Create Virtual Device(left-bottom corner) from Android Virtual Devices Manager.
Select the Hardware 'Nexus 5x' or 'Nexus 5'.
Download the system image 'Nougat' with Google Play or 'O' with Google Play. 'O' is the latest Android 8.0 version.
Click on Next and Finish.
Run your app again on the new virtual device and click on the 'Upgrade now ' option that shows along with the warning message.
You will be directed to the Play Store and you can update your Google Play services easily.
See your app runs smoothly!