LUNG ALVEOLUS, SEM. LUNG ALVEOLUS, SEM Alveoli are tiny cavities clustered together to form the alveolar sac which is the terminal end of the bronchi. Gas exchange between outside air and the bloodstream takes place in the alveoli. Oxygen in the inhaled air passes into the bloodstream where it is captured by hemoglobin in the red blood cells. Carbon dioxide is released from the bloodstream into the alveoli and expelled with the expired air. Scan electron microscopy. Magnification: 200x.