"Wir geben das Ei dazu."
German has a concept of "separable verbs" in this case dazugeben you have to know that dazugeben means "to add" and then recognize that the dazu was separated from the verb and put at the end of the sentence (which is how separable verbs work.) Basically, you'll need to spend some time on your own memorizing separable verbs so that you can recognize them when they come up.
Here is a list of some: http://german.about.com/library/verbs/blverb_pre02.htm
The main problem with this is that Duolingo seems to treat the prefix and the stem as separate words when asking questions, so assumes that if you have come across both „dazu“ and „geben“ before that you should understand/know how to use „dazugeben“, which isn't necessarily the case. It also means that things like „dazugeben“ are presented in inappropriate sections. (I was just asked about it in "Adverbs 1"; „dazugeben“ is not an adverb and thus its placement may potentially make the learning of the adverb version of „dazu“ more difficult.)
It seems a little unreasonable to me to be expected to know every separable verb which uses a prefix you've met before (especially if it was in a different part of speech, such as „dazu“ as an adverb or „auf“ as a preposition). While this is a largely German problem, so probably not the highest priority for the devs, the same is true of phrases and idioms, which are cross-language.
In a list of instructions in a recipe this style of sentence would be common.
- Measure out the flour and put it in a mixing bowl
- Add salt, sugar, and baking powder
- Mix the dry ingredients
- Now add the egg
If this recipe was being done on a cooking show, the host would probably say either "Next, we add the egg." or "Next, add the egg."
Hope that helps!