"It is cheap."
"Це дешево" is correct indeed, and "дешево" is indeed an adverb i.e. it modifies verbs (e.g. жити дешево, їсти дешево - to live cheap, to eat cheap), don't know why it hints that :) It should be used here since it modifies "коштує" even though you can skip the verb.
The adjectives would be дешевий/дешева/дешеве