Grace is "an expression of divine benevolence". Mercy is the kindness God shows to those who don't deserve it.
I don't know what you mean by "why is it one or the other"?
Yes, God can have mercy on anyone he chooses.
Coule we agree on the following
Grace is Gods undeserved favor? and Mercy as getting what you do not deserve?
You keep giving what I see as a false choice.. either God must forgive everyone... or that He has placed requirements on being saved that man must obey
Cab there be a 3rd choice ...one that was quoted by Paul
"I will have Mercy on whom I will have mercy"