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Try changing the subnet after you have selected the VPC because the subnet determines the Availability Zone. The error message is saying "The t2.micro instance type is not available in the AZ that you have selected". If it does not work in any of the AZs in the particular region, then you have two options:
a) Choose another AWS region b) Choose a different instance type. There may be a cost associated with choosing a different instance type, so check out the AWS documentation for how much you will be billed for that particular instance type. Also once you are done with your exercise, make sure to delete every resource you created.
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It worked! Thank you so much for your comment :)
Hi Mona - Is it possible for you to accept my answer. Thanks