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It`s a transaction that depends on two things: a nicotine craving that can`t wait and a budget that is wanting.

Cigarettes are cheaper by the pack. By the carton, they are an even better value. But, bought individually, they are sometimes more affordable.

And so for a dime or a quarter, for an amount that won`t even get you a cup of coffee, in grocery stores and liquor stores and on street corners in the poorest parts of the city, the transaction is made for a single cigarette.

”Sometimes you don`t have the money,” said Faye Gibson, 37.

”And you`ll be having a nicotine fit,” said her friend, Diane Kroger, 29, finishing the thought.

On Monday afternoon, they were smoking borrowed cigarettes as they stood outside a graffiti-scarred grocery store in the 3700 block of South Cottage Grove Avenue, a street littered by broken glass.

Had they not run into a friend, they said they would have had other options: the store or one of the other neighborhood residents hanging out on the sidewalk.

The sidewalk entrepreneur probably would be cheaper. In any case, the marketplace would take care of their needs.

Their alderman, Bobby Rush (2nd), and other members of the City Council would like to put a crimp in that underground economy.

”There are a lot of people in my community who just can`t afford to pay $2.25 or or $2.50 for a pack of cigarettes, so they are buying them one at a time,” Rush said. ”The unscrupulous business owners are making windfall profits on the backs of my constituents.”

Rush tried in vain on Monday to get a City Council committee to support an ordinance levying fines of up to $500 for merchants who are opening packs of cigarettes and selling them one at a time. He said the cigarettes go for as much as 35 cents each.

But the proposed ordinance hit a snag when Ald. Ed Smith (28th), chairman of the Health Committee, expressed concerns about the legal language of the ordinance, which has been languishing in his committee for several months, and refused to call a vote on the matter.

Afterward, though, Smith praised the ordinance, saying that not only did the practice of selling cigarettes one at a time gouge buyers, but that it also created a potential health risk beyond that normally associated with tobacco.

Because the cigarettes are removed from the packs, handled by others and then sold, Smith said, ”It`s obviously a health hazard.”

In addition to ripping off customers, Rush said, the merchants are ripping off the city because they are not paying sales taxes on the extra dollars they reap. Cigarettes come in packages of 20, he said, and merchants could be making as much as $7 a pack by selling them individually.

Currently, Smith said, there is nothing on the books to bar the practice, which he said occurs in his West Side ward, too.

”It`s a problem all over,” he said. ”These guys are making all kinds of dollars.”

Not everybody sees the merchants as villains.

”I don`t blame anybody,” said one 53-year-old South Side resident who buys his Newports by the pack. ”Everybody`s just trying to make it.”

He said that, after food and other essential expenses, a person might have little money remaining. ”He`s got change left, so he buys a couple cigarettes.”

If the stores won`t sell them to him, ”somebody`s going to do it.”

”These people are going to walk up to me or to you. That`s how the stores thought about doing it,” he said.

In Rush`s ward, smokers griped about the prices of the single cigarettes, but some also saw their availability as a convenience.

Gibson said that if the merchants don`t sell by the butt, residents will step in as middlemen. ”That`s just going to make somebody else buy `em and come out here and sell `em to us,” she said.

Another reason she likes to buy cigarettes individually, she said, is that it helps her limit her smoking.

Inside Farmland Food Center, nestled between two public housing projects at 3749 S. Cottage Grove Ave., owner Heni Haddad denied the accusation by neighborhood residents that he sold cigarettes individually.

A sign dated June 1, 1991, said, ”We don`t sell loose cigarettes.”

He said three or four people outside his store often sell cigarettes from opened packs.

”I give `em to my black brothers and they give me a small donation,”

said Al Jones, 31, a neighborhood resident.

People used to be willing to give away cigarettes if you asked, Jones said, but not so much anymore because they are so expensive, even by the pack. Bumming a cigarette is not as easy as it used to be.

He said the required donation is less than the price at nearby stores.