What area in the brain sets the respiratory rhythm?

The correct answer is: medulla oblongata.

This is a structure of central nervous system and it is located in the brainstem. Medulla oblongata is responsible for autonomic (involuntary) functions of the body such as breathing, heart rate and blood pressure. The medulla contains the cardiac, respiratory, vomiting and vasomotor centers.

Respiratory rhythm is regulated by groups of chemoreceptors that detect changes in the acidity of the blood and send signal to medulla oblongata in order to regulate it.