(a) What Peter meant by calling Christians a "chosen race" (1 Peter 2:9-10)
Peter told the believers, "You are a chosen race, a royal priesthood, a holy nation, God's own people, that you may declare the wonderful deeds of him who called you out of darkness into his marvellous light." By "chosen race" he meant that Christians are a people specially selected by God, just as Israel had been chosen in the Old Testament. They are set apart as God's own possession, called out of the darkness of sin and ignorance into the light of salvation through Christ.
He explained that once they were not a people, but now they are God's people; once they had not received mercy, but now they have received mercy. As a royal priesthood they have direct access to God and offer spiritual sacrifices acceptable to Him through Jesus Christ. As a holy nation they are to live pure lives, distinct from the sinful world, and to proclaim by word and conduct the praises and mighty works of God who saved them. Being chosen is therefore both a privilege and a responsibility to live holy and to bear witness.
(b) How Peter expected them to behave towards civil authorities (1 Peter 2:13-17)
Peter urged them, for the Lord's sake, to be subject to every human institution, whether to the emperor as supreme, or to governors as sent by him to punish those who do evil and to praise those who do good. He said it was God's will that by doing good they should silence the ignorance of foolish men. Though they were free, they were not to use their freedom as a cover-up for evil, but to live as servants of God. He summed it up: "Honour all people. Love the brotherhood. Fear God. Honour the emperor." Thus Christians were to be loyal, law-abiding and respectful citizens.