Three people A,B,C are standing in a line so that C can see A and B, B can see A but not C, A cannot see anyone. There are 2 blue hats and 3 red hats and 1 hat is placed on each of them. Now when asked - Do you know the colour of your hat ? : C answered 'no' Then B was asked and he too said 'no'. Then A was asked and he said 'yes'. What is the colour of A's hat ? P.S. They can hear answer of each other.

This is a classic logic puzzle. C sees A and B's hats but says 'no' - meaning he doesn't see two blue hats (which would immediately tell him his hat is red, since only 2 blue hats exist). B hears C's 'no' and sees A's hat, but still says 'no' - meaning A's hat must not be blue (otherwise B would know his is red, since C didn't see two blues). A deduces this and knows his hat is red. The reasoning eliminates all other possibilities.