Lower temperature settings on your water heater are most energy-efficient, because your water heater itself is anything but efficient.

If water heaters were 100 percent efficient, the answer to this question would have been D. (The energy contained within the different volumes of hot water for each of the answer choices is actually the same.)

In reality, water heater energy losses are a function of the temperature setting. Because your water heater is designed to maintain whatever temperature you set, energy is continually wasted keeping water hot and at the ready—even when you have no intention of using it. Therefore, tanks set at high temperatures will experience greater energy losses than those set at lower temperatures.

As a general rule, you’ll save 3 to 5 percent on your water heater energy costs for every 10 degrees you lower the temperature setting.

To conserve the most energy, it’s recommended that you set your water heater temperature to 120 degrees Fahrenheit or even lower. For most households, this temperature allows for adequate hot-water availability, slows mineral and sludge buildup, and extends the life of the water heater. Water heated to 120 degrees is also safer than water heated to a scalding 140 degrees or higher.

If you’re in the market for a new water heater, take note of the tank’s Energy Factor (EF). The EF tells you how efficiently a given water heater will perform. It takes into account the energy required to heat the water, as well as the heat lost from the water during storage. The higher the EF, the more you’ll save—in energy and in dollars.—Colleen Howell