Step 1: Concept
In an elastic collision between two bodies of identical mass, the bodies exchange their velocities.
Step 2: Analysis
Initial velocities: $v_P = 0.7$, $v_Q = -0.4$.
After collision: $v_P' = v_Q = -0.4$, and $v_Q' = v_P = 0.7$.
Step 3: Conclusion
The velocities are swapped: $-0.4 m/s$ and $0.7 m/s$.
Final Answer: (B)