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There are spells like Continual Flame which require ruby dust as a material component. The rules explicitly require "ruby dust worth X gp", not "ruby dust made from rubies worth X gp".
Let's say we found a ruby that costs 500 gp and want to crush it to a ruby dust. How much would this dust cost? "500 gp" doesn't seem plausible, since 500 gp worth of dust could be produced from much cheaper rubies of the same total weight.
Related: What is a 500gp Ruby useful for?
It's up to the DM.
Having said that, D&D pricing doesn't make economic sense, so the answer I prefer1 when I DM is that is you get 500gp worth of dust out of 500gp worth of rubies.
The game also doesn't specify any other properties than value when it talks about most gems. Maybe the price is exactly proportional to weight, i.e. a 500gp ruby is equal in weight to 10 50gp rubies.
The 500gp is the barrier, not the mechanics by which the item is gained. Either the item is given as a reward for a task done and worth 500gp or the item is bought with 500gp worth of gold earned. Either way the DM has a method by which to reward the characters with something which opens up more spells.
When you break down the economics or the price requirement on spells you can clearly see this doesn't stack up. If you're in a region where prices are higher because a lack of supply or lower because of over supply that doesn't mean you start having to factor in inflation, production methods or supply routes to calculate the "worth" of a ruby. All the game is interested in is "did the player have to part with 500gp to get this item?"
That being said the final say always sits with your DM - ask them.
Diamond powder of an appropriate grain size (around 50 microns) burns with a shower of sparks after ignition from a flame. Consequently, pyrotechnic compositions based on synthetic diamond powder can be prepared.
If you do want some effect from crushing gems in your game, you can apply some arguments below
This quora post implies that a 1kg or 5000ct diamond costs $16,250,000.00.
Natural Diamond powder seems to cost $2/ct, so equating the two means 5000ct of natural diamond dust costs $10,000.
That's a price drop of 1/1,625 for crushing gems into dust*.
So your 500gp ruby is now 500/1625 gp or 0.3gp. That's the equivalent of 3sp if 1gp is 10sp.
So in the real world the price really gets crushed.
In the real world however, you can't use gem powder to cast spells, so the above argument won't necessarily hold true. It's down to the GM to decide if this is the case, that the labour in crushing gems increases the value in the same way purifying raw materials like iron ore into steel increases the value of the product.
It may be that your GM is not swayed by either argument, especially as it relies on real world analogies, or trying to understand D&D/fantasy economies. The simplest solution is to have the two cost the same, either by GM fiat, or some balancing of the above two arguments.
*Note, that it's possible that diamond dust has more utility than ruby dust. Or less.
It's quite likely these arguments about how economics work in D&D are unconvincing, largely because the economy in D&D doesn't make much sense if you look too closely, and even if it did there are too many differences to make proper analogies.
