Let $C_1 = \{ z: |z| = \frac{1}{7} \}$ be a circle inside the unit circle $C_0 = \{ z: |z|=1\}$. The fractional linear transformation: $$ \phi: z \mapsto \frac{z- \frac{1}{2}}{\frac{1}{2}z-1} $$ is a map from the unit cirle to itself, $\phi: C_0 \to C_0$. What is the image of $C_1$ ? Obviously it is a circle, but what is the radius and center of $\phi(C_1)$?
I hope this figure not too confusing. $\phi$ maps the light blue circle to the dark blue circle. Similarly it maps light green to dark green.
In regard to 3 points... I know there is formula for 3 points $(x_1, y_1), (x_2, y_2),(x_3, y_3)$ going through a circle using a determinant but I have not used it:
$$ \left|\begin{array}{cccc} x^2 + y^2 & x & y & 1 \\ x_1^2 + y_1^2 & x_1 & y_1 & 1 \\ x_2^2 + y_2^2 & x_2 & y_2 & 1 \\ x_3^2 + y_3^2 & x_3 & y_3 & 1 \\ \end{array} \right|=0$$
Which 3 points should I pick anyway? Even more alternatively, are there ways to solve this using power of a point from geometry?
I suspect @vvnitram's answer is wrong. Here is a plot of the image circle (computed numerically) and the circle he proposes. These are not quite the same.


Let $$w=u+iv=\frac{2z-1}{z-2}$$
Rearranging, we get $$z=\frac{2w-1}{w-2}$$
So the image of the circle $|z|=\frac 17$ is given by $$\left|\frac{2w-1}{w-2}\right|=\frac 17$$ $$\Rightarrow 7|2w-1|=|w-2|$$ $$\Rightarrow 49((2u-1)^2+4v^2)=(u-2)^2+v^2$$
This simplifies to $$195u^2+195v^2-192u+45=0$$
This is a circle, centre $(\frac{32}{65},0)$ and radius $\frac {7}{65}$