Is the process of a balloon deflating an example of diffusion?
If you mean the balloon deflating slowly while sealed up airtight — yes, diffusion is responsible. In helium balloons the small helium molecules readily diffuse through spaces between the molecules of rubber, especially when stretched thin, leaving the balloon dead. For balloons filled with air the higher pressure inside leads to diffusion of air molecules (nitrogen and oxygen) out through the rubber until pressures are equalized. Mylar (metallic) balloons hold pressure much longer because Mylar is much less permeable to gas.
