Everyone in Wonderland is either sane or mad. A sane person believes a statement if and only if it is true. A mad person believes a statement if and only if it is false.
Alice asked the King of Hearts whether or not the Queen of Hearts was mad. The King laughed and said, "I believe she believes she is mad!"
What can we conclude?
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If the Queen of Hearts is sane, then she will not believe she is mad. If the Queen of hearts is mad, then since she does not believe true statements, she will not believe she is mad. Therefore, the Queen of Hearts does not believe she is mad , so the King of Hearts believes a false statement. Then the King must be mad.
However, we cannot determine whether the Queen is sane or mad, as either way the King would believe that she believed she was mad.