diff --git a/backup/converter/moodle1/handlerlib.php b/backup/converter/moodle1/handlerlib.php
index 3e8283a0899..66bf1f1679f 100644
--- a/backup/converter/moodle1/handlerlib.php
+++ b/backup/converter/moodle1/handlerlib.php
@@ -1778,7 +1778,7 @@ abstract class moodle1_qtype_handler extends moodle1_plugin_handler {
      * @param int $oldquestiontextformat
      * @return array
      */
-    protected function get_default_numerical_options($oldquestiontextformat) {
+    protected function get_default_numerical_options($oldquestiontextformat, $units) {
         global $CFG;
 
         // replay the upgrade step 2009100100 - new table
@@ -1799,6 +1799,11 @@ abstract class moodle1_qtype_handler extends moodle1_plugin_handler {
             $options['instructionsformat'] = $oldquestiontextformat;
         }
 
+        // Set a good default, depending on whether there are any units defined.
+        if (empty($units)) {
+            $options['showunits'] = 3;
+        }
+
         return $options;
     }
 
diff --git a/question/format/xml/format.php b/question/format/xml/format.php
index b744ce527a6..5017cd56607 100644
--- a/question/format/xml/format.php
+++ b/question/format/xml/format.php
@@ -628,8 +628,8 @@ class qformat_xml extends qformat_default {
             }
         }
         $qo->unitgradingtype = $this->getpath($question, array('#', 'unitgradingtype', 0, '#'), 0);
-        $qo->unitpenalty = $this->getpath($question, array('#', 'unitpenalty', 0, '#'), 0);
-        $qo->showunits = $this->getpath($question, array('#', 'showunits', 0, '#'), 0);
+        $qo->unitpenalty = $this->getpath($question, array('#', 'unitpenalty', 0, '#'), 0.1);
+        $qo->showunits = $this->getpath($question, array('#', 'showunits', 0, '#'), null);
         $qo->unitsleft = $this->getpath($question, array('#', 'unitsleft', 0, '#'), 0);
         $qo->instructions['text'] = '';
         $qo->instructions['format'] = FORMAT_HTML;
@@ -644,6 +644,15 @@ class qformat_xml extends qformat_default {
                     $instructions, array('0', '#', 'file'), array()));
         }
 
+        if (is_null($qo->showunits)) {
+            // Set a good default, depending on whether there are any units defined.
+            if (empty($qo->unit)) {
+                $qo->showunits = 3; // qtype_numerical::UNITNONE;
+            } else {
+                $qo->showunits = 0; // qtype_numerical::UNITOPTIONAL;
+            }
+        }
+
         $this->import_hints($qo, $question, false, false, $this->get_format($qo->questiontextformat));
 
         return $qo;
@@ -737,7 +746,7 @@ class qformat_xml extends qformat_default {
 
         $qo->unitgradingtype = $this->getpath($question,
                 array('#', 'unitgradingtype', 0, '#'), 0);
-        $qo->unitpenalty = $this->getpath($question, array('#', 'unitpenalty', 0, '#'), 0);
+        $qo->unitpenalty = $this->getpath($question, array('#', 'unitpenalty', 0, '#'), null);
         $qo->showunits = $this->getpath($question, array('#', 'showunits', 0, '#'), 0);
         $qo->unitsleft = $this->getpath($question, array('#', 'unitsleft', 0, '#'), 0);
         $qo->instructions = $this->getpath($question,
@@ -801,6 +810,16 @@ class qformat_xml extends qformat_default {
             $qo->instructions['files'] = $this->import_files($this->getpath($instructions,
                     array('0', '#', 'file'), array()));
         }
+
+        if (is_null($qo->unitpenalty)) {
+            // Set a good default, depending on whether there are any units defined.
+            if (empty($qo->unit)) {
+                $qo->showunits = 3; // qtype_numerical::UNITNONE;
+            } else {
+                $qo->showunits = 0; // qtype_numerical::UNITOPTIONAL;
+            }
+        }
+
         $datasets = $question['#']['dataset_definitions'][0]['#']['dataset_definition'];
         $qo->dataset = array();
         $qo->datasetindex= 0;
diff --git a/question/type/calculated/backup/moodle1/lib.php b/question/type/calculated/backup/moodle1/lib.php
index ede1a567895..f2ad04e24cf 100644
--- a/question/type/calculated/backup/moodle1/lib.php
+++ b/question/type/calculated/backup/moodle1/lib.php
@@ -54,12 +54,13 @@ class moodle1_qtype_calculated_handler extends moodle1_qtype_handler {
 
         // convert and write the numerical units and numerical options
         if (isset($data['calculated'][0]['numerical_units'])) {
-            $numericalunits   = $data['calculated'][0]['numerical_units'];
-            $numericaloptions = $this->get_default_numerical_options($data['oldquestiontextformat']);
+            $numericalunits = $data['calculated'][0]['numerical_units'];
         } else {
-            $numericalunits   = array();
-            $numericaloptions = array();
+            $numericalunits = array();
         }
+        $numericaloptions = $this->get_default_numerical_options(
+                $data['oldquestiontextformat'], $numericalunits);
+
         $this->write_numerical_units($numericalunits);
         $this->write_numerical_options($numericaloptions);
 
diff --git a/question/type/numerical/backup/moodle1/lib.php b/question/type/numerical/backup/moodle1/lib.php
index eb244584727..06b56983f47 100644
--- a/question/type/numerical/backup/moodle1/lib.php
+++ b/question/type/numerical/backup/moodle1/lib.php
@@ -52,12 +52,13 @@ class moodle1_qtype_numerical_handler extends moodle1_qtype_handler {
 
         // convert and write the numerical units and numerical options
         if (isset($data['numerical'][0]['numerical_units'])) {
-            $numericalunits   = $data['numerical'][0]['numerical_units'];
-            $numericaloptions = $this->get_default_numerical_options($data['oldquestiontextformat']);
+            $numericalunits = $data['numerical'][0]['numerical_units'];
         } else {
-            $numericalunits   = array();
-            $numericaloptions = array();
+            $numericalunits = array();
         }
+        $numericaloptions = $this->get_default_numerical_options(
+                $data['oldquestiontextformat'], $numericalunits);
+
         $this->write_numerical_units($numericalunits);
         $this->write_numerical_options($numericaloptions);
 
diff --git a/question/type/numerical/db/install.xml b/question/type/numerical/db/install.xml
index 21b76313ecf..15dcb777298 100644
--- a/question/type/numerical/db/install.xml
+++ b/question/type/numerical/db/install.xml
@@ -23,10 +23,10 @@
       <FIELDS>
         <FIELD NAME="id" TYPE="int" LENGTH="10" NOTNULL="true" UNSIGNED="true" SEQUENCE="true" NEXT="question"/>
         <FIELD NAME="question" TYPE="int" LENGTH="10" NOTNULL="true" UNSIGNED="true" DEFAULT="0" SEQUENCE="false" PREVIOUS="id" NEXT="showunits"/>
-        <FIELD NAME="showunits" TYPE="int" LENGTH="4" NOTNULL="true" UNSIGNED="true" DEFAULT="0" SEQUENCE="false" COMMENT="display units as multichoice" PREVIOUS="question" NEXT="unitsleft"/>
+        <FIELD NAME="showunits" TYPE="int" LENGTH="4" NOTNULL="true" UNSIGNED="true" DEFAULT="0" SEQUENCE="false" COMMENT="How units are handled: 3) Not used at all, 0) Optional, or 1) must be right or penalty applied." PREVIOUS="question" NEXT="unitsleft"/>
         <FIELD NAME="unitsleft" TYPE="int" LENGTH="4" NOTNULL="true" UNSIGNED="false" DEFAULT="0" SEQUENCE="false" COMMENT="display the unit at left as in $1.00" PREVIOUS="showunits" NEXT="unitgradingtype"/>
-        <FIELD NAME="unitgradingtype" TYPE="int" LENGTH="4" NOTNULL="true" UNSIGNED="true" DEFAULT="0" SEQUENCE="false" COMMENT="0 no penalty, 1 response grade, 2 total grade" PREVIOUS="unitsleft" NEXT="unitpenalty"/>
-        <FIELD NAME="unitpenalty" TYPE="number" LENGTH="12" NOTNULL="true" UNSIGNED="true" DEFAULT="0.1" SEQUENCE="false" DECIMALS="7" PREVIOUS="unitgradingtype"/>
+        <FIELD NAME="unitgradingtype" TYPE="int" LENGTH="4" NOTNULL="true" UNSIGNED="true" DEFAULT="0" SEQUENCE="false" COMMENT="0 no penalty, 1 fraction response grade, 2 fraction total grade" PREVIOUS="unitsleft" NEXT="unitpenalty"/>
+        <FIELD NAME="unitpenalty" TYPE="number" LENGTH="12" NOTNULL="true" UNSIGNED="true" DEFAULT="0.1" SEQUENCE="false" DECIMALS="7" COMMENT="Penalty for getting the unit wrong, when they are being graded." PREVIOUS="unitgradingtype"/>
       </FIELDS>
       <KEYS>
         <KEY NAME="primary" TYPE="primary" FIELDS="id" NEXT="question"/>
diff --git a/question/type/numerical/db/upgrade.php b/question/type/numerical/db/upgrade.php
index 291b6fef48a..09550c69ac4 100644
--- a/question/type/numerical/db/upgrade.php
+++ b/question/type/numerical/db/upgrade.php
@@ -61,11 +61,22 @@ function xmldb_qtype_numerical_upgrade($oldversion) {
         // Adding keys to table question_numerical_options
         $table->add_key('primary', XMLDB_KEY_PRIMARY, array('id'));
         $table->add_key('question', XMLDB_KEY_FOREIGN, array('question'), 'question', array('id'));
+
         // Conditionally launch create table for question_calculated_options
         if (!$dbman->table_exists($table)) {
             // $dbman->create_table doesnt return a result, we just have to trust it
             $dbman->create_table($table);
         }
+
+        // Set a better default for questions without units.
+        $DB->execute('
+                UPDATE {question_numerical_options} qno
+                   SET showunits = 3
+                 WHERE NOT EXISTS (
+                         SELECT 1
+                           FROM {question_numerical_units} qnu
+                          WHERE qnu.question = qno.question)');
+
         upgrade_plugin_savepoint(true, 2009100100, 'qtype', 'numerical');
     }
 
@@ -81,7 +92,7 @@ function xmldb_qtype_numerical_upgrade($oldversion) {
             $dbman->add_field($table, $field);
         }
 
-        // In the past, question_match_sub.questiontext assumed to contain
+        // In the past, question_numerical_options.instructions assumed to contain
         // content of the same form as question.questiontextformat. If we are
         // using the HTML editor, then convert FORMAT_MOODLE content to FORMAT_HTML.
         $rs = $DB->get_recordset_sql('