This issue has been fixed by Google in the newer AS/Emulator
NOTE: Only some API's is available with Playstore, if the one you chose is not available at the creation time, follow this guide
The AVD GUI does NOT allow the selection of Play Images for some reason anymore!

Since you cannot select the Play store image anymore you need to edit some files
NOTE: This may also work in Visual Studio (not tested - some feedback will be apreciated!)
Load the image with SDK manager

Create a device with the correct API and Hardware profile and Finish

Before you start this new AVD you need to Edit the files as follow

Edit config.ini (I use VIM but any editor will work) Edit the following lines in the file
PlayStore.enabled=true
image.sysdir.1=system-images\android-32\google_apis_playstore\x86_64\
tag.display=Google Play
tag.id=google_apis_playstore
Note: if you are on a Mac with Apple chip, set this line differently:
image.sysdir.1=system-images/android-32/google_apis_playstore/arm64-v8a

In the latest Android Studio (Electric Eel), you need to launch SDK Manager, and under SDK Platforms check the "Show Package Details" box. Then select the Google Play images:

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