Answer
A is a knave, and B is a knight.
Work Step by Step
A says "we are both knaves" and B says nothing. Because B says nothing, we cannot initially interpret whether she is a knight or whether she is a knave. If both A and B are knaves, then A's statement is correct. However, she would then be telling the truth and thus not be a knave. Yet if she is a knight, she would not be able to say she was a knave. Therefore, B must be a knave and A must be a knight. They are not both knaves.
