The correct verb to fill in the blank in the sentence "Elsa y yo _______ el juguete" is "hicimos."
So the complete sentence would be:
"Elsa y yo hicimos el juguete."
This translates to "Elsa and I made the toy."
The option "hizo" is incorrect because it is the third-person singular form of the verb and does not agree with the subject "Elsa y yo."