Yes, such a huge amount of resources is unjustified, especially for such useless ones. Mercury, for example, is completely unclear why it's needed for creating dragons. Gems and crystals can be used in construction for decoration, but sulfur and mercury are only used by alchemists and mages.

My friends, let's not forget that training soldiers is a complex and time-consuming process. I used to wonder, "Why do dragons need mercury, and knights need crystals?" But compare the game to real life: we buy bread in a store for paper money and electronics for electronic money. The same is true in the world of Heroes. Crystals are used to pay for the work of builders, architects, construction material delivery workers, major repairs, and hot water. They can also be exchanged for other types of resources (food, sand, and cement, for example). It is quite possible that the Academy of Magic uses guest workers from the Elven faction (or vice versa). Think bigger. Be glad that instead of all these complications, we simply give twenty crystals and get the building we need. Consider it the magic of the Heroes world.