Changes within species have been observed, but what about changes from one species to another?
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Yes, mostly in insects and plants (fast reproductive cycles)
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Speciation? Also observed.
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When?
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http://blogs.scientificamerican.com/science-sushi/evolution-watching-speciation-occur-observations/
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Some good examples and a good read. What about more dramatic changes though? These were all still the same kind of animal with small variations.
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After enough speciation events you will see a dramatic change from the start to the end point. Its all a time scale.
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Speciation can be dramatic enough over time to change animals from a common ancestor into such diverse kinds as fish and birds?
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Over hundreds of millions or billions of years yes. Think of it as a tree continuously branching outward.
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How does the new information needed to make such complex organisms from simple ones get there?
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DNA is 4, that's right 4 nucleotides in varying combinations and sequences. If binary can program an entire computer, the internet, etc and its just 0s and 1s, I imagine 16 possible combinations in varying order and sequences can achieve some nice variety.